Question: f. What is the regular payback period for these two projects? Project A Time period 0 1 2 3 4 5 6 7 Cash flow

f. What is the regular payback period for these two projects? Project A Time period 0 1 2 3 4 5 6 7 Cash flow (375) (300) (200) (100) 600 600 926 (200) Cumulative cash flow (375) (675) (875) (975) (375) 225 1,151 951 Intermediate calculation for payback Payback using intermediate calculations Project B Time period 0 1 2 3 4 5 6 7 Cash flow (575) 190 190 190 190 190 190 - Cumulative cash flow (575) (385) (195) (5) 185 375 565 565 Intermediate calculation for payback Payback using intermediate calculations Payback using PERCENTRANK Ok because cash flows follow normal pattern. g. At a cost of capital of 12%, what is the discounted payback period for these two projects? WACC = 12% Project A Time period 0 1 2 3 4 5 6 7 Cash flow (375) (300) (200) (100) 600 600 926 (200) Disc. cash flow (375) (268) (159) (71) 381 340 469 (90) Disc. cum. cash flow (375) (643) (802) (873) (492) (152) 317 227 Intermediate calculation for payback Payback using intermediate calculations Project B Time period 0 1 2 3 4 5 6 7 Cash flow (575) 190 190 190 190 190 190 - Disc. cash flow (575) 170 151 135 121 108 96 - Disc. cum. cash flow (575) (405) (254) (119) 2 110 206 206 Intermediate calculation for payback Payback using intermediate calculations Discounted Payback using PERCENTRANK Ok because cash flows follow normal pattern.

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