Question: Show formula for immediate calc for payback (how the payback is calculated) with the answer f. What is the regular payback period for these two

Show formula for immediate calc for payback (how the payback is calculated) with the answer

f. What is the regular 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)
Cumulative cash flow -$375 -$675 -$875 -$975 -$375 $225 $1,151 $951
Intermediate calculation for payback
Payback using intermediate calculations 4.625
Project B
Time period 0 1 2 3 4 5 6 7
Cash flow -$575 $190 $190 $190 $190 $190 $190 $0
Cumulative cash flow -$575 -$385 -$195 -$5 $185 $375 $565 $565
Intermediate calculation for payback
Payback using intermediate calculations 3.026
Payback using PERCENTRANK 3.026 Ok because cash flows follow normal pattern.

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