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Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows:
		Expected Net Cash Flows
	Time	Project A	Project B
	0	($375)	($575)
	1	($300)	$190
	2	($200)	$190
	3	($100)	$190
	4	$600	$190
	5	$600	$190
	6	$926	$190
	7	($200)	$0

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		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
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		5.400
Project B
	Time period	0	1	2	3	4	5	6	7
	Cash flow	-$575	$190	$190	$190	$190	$190	$190	$0
	Disc. cash flow	-$575	$170	$151	$135	$121	$108	$96	$0
	Disc. cum. cash flow	-$575	-$405	-$254	-$119	$2	$110	$206	$206
Intermediate calculation for payback
Payback using intermediate calculation
	Discounted Payback using PERCENTRANK		Ok because cash flows follow normal pattern.

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