1. What does the assumption of no market frictions mean? Is this assumption true in current commodity markets?
2. Project L costs $60,000, its expected cash inflows are $10,000 per year for 11 years, and its WACC is 11%. What is the project's NPV? Round your answer to the nearest cent. Do not round your intermediate calculations.
3. Project L costs $45,000, its expected cash inflows are $15,000 per year for 7 years, and its WACC is 12%. What is the project's payback? Round your answer to two decimal places.