11- Assignment - The Basics of Capital Budgeting The payback method thelps firms estoblish and identify a maximum acceptable paybock period that helps in their capital budgeting decaions Consider the case of Cute Camel Woodcraft Company: Cute Camel Wooderaft Company is a small firm, and sevaral of its managers are worried about how soon the firm will be able to recover its initial investment from Project Alpha's expected future cash flows. To answer this question, Cute Camel's CFO has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash fiows are received evenly throughout each year. Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. (Note: Round the conventional payback period to two decimal places. If your answer is negative, be sure to use a minus sign in your antwer.) The conventional paybsck period ignores the time value of money, and this concerns Cute Cameis CFO. He has now asked you to compute Alpha'i discounted payback perisd, assuming the company has a bew cost of copital. Complete the following table and perform any hecessary calculations. Round the discounted cesh fow values to the nearest whole dollar, and the discounted payback period to two decimal pleces. For full credit, complete the entire toble. (Note: If your answer is negative, be sure to use a minus algn in your answer.) Which version of a project's payback period should the CFO use when evaluating Project Alpha, given its theoretical supeniority? The regular payback peried The discounted paybock period One theoretical disadvantage 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 poyback period. How much value in this example does the discounted paybeck period method fall to recognize due to this theoretical deficlency? 42,916,953 $1,696,274 34,529,607 51,250,295