13. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capitai budgeting decisions. Consider the case of Cute Camel Woodcraft Company? Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Delta'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 flows are recelved evenly throughout each yeat. Complete the following table and compute the project's comantional paybacik pariod. 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 slgn in your answer.) The conventional payback. periodignores the time value of money, and thls concerns Cute Camer's CFO. He has now asked you to compute Deitals discounted payback period, assuming the company has a 7 wh cost of capital, Complete the following table and perform any necessary calculations. Round the discounted cash fiow values to the nearest whole dollar, and the discounted payback.period to two decimal places. For full credit, complete: the entire table. (Note: If your answer is negotive, be sure to use a minus sign in your answer.) Which version of a project's payback perlod should the CFO use when evaluating Project Delts, given its theoretical superiority? The regular payback period The discounted paybock period One theoretical disadvantage of both payback methods - compared to the net present value method-is that they fall to consider the value of the ca: flows beyond the point in time equal to the payback period. How much value in this example does the discounted payback period method fall to recognize due to this thearetical deficiency? 55,140,636 53,297,680 31,428,521 $2,009,795