1. Compute the payback statistic for Project B if the appropriate cost of capital is 11 percent and the maximum allowable payback period is three years. (Round your answer to 2 decimal places. If the project never pays back, then enter a "0" (zero).) Project B Time: 0 1 2 3 4 5 Cash flow –$11,100 $3,360 $4,200 $1,540 $0 $1,020 Payback years

2. Phillips Equiptment has 75,000 bonds outstanding with yield-to-maturity of 7.5% and the bond are selling at the face value. The company has also has 750,000 shares of preferred stock and 2.5 million shares of common stock outstanding. The preferred stock sells for $64 a share and pays $6 divindend per share. The common stock has a beta of 1.21 and sells for $44 a share. The U.S. Treasury bill is yielding 2.3% and the return on the market is 11.2%. The corporate tax rate is 34%. What is the firms weighted average cost of capital?