10. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budqeting decisions. Consider the case of Cute Camel Woodcraft Comparry: Cute Camel Wooderaft Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initiat investment from Project Sigma's expected future cash flows. To answer this question, Cute Camel's CFO has asked that you compute the project's payback period usang the following expected net cash flows and assuming that the cash flows are recerved evenly throughout each yeac. Complete the following table and compute the project's comventional payback period. For full credit, complete the entire table. (Note: Round the conventional payback period to the nearest two decimal places. If your answer is negative use a minus sign.) The comventional payback period ignores the tame value of money, and thas concerns Cute Camel's Cro. He has now asked you to compute Sigma's discounted payback period, assumang the company has a 9% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted paybock period to the nearest two decimal places. For full credit, complete the entire table. (Note: If your answer is negative use a minas sign.) Which version of a project's paryback period should the CFO use when evaluating Project Sigma, given its theoretical superiority? The regular paybuck period The discounted payback period One theoretical disadvantoge of both payback methods-compared to the net present value method-is that they fail to consider the value of the cash flows beyond the point in time equal to the payback period. How much vake does the discounted payback period method fail to recognize due to this theoretical deficiency? $1,763,323$4,928,461$3,186,183$1,351,321