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6. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider

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6. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: its initial investment from Project Delta's expected future cash flows. To answer this question, Blue Hamster'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 reived evenly throughout each year. Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. Round the conventional payback period to two decimal places. If your answer is negative, be sure to use a minus sign in your answer.) the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Which version of a project's payback period should the CFO use when evaluating Project Delta, given its theoretical superiority? The regular payback period The discounted payback period flows beyond the point in time equal to the payback period. How much value in this example does the discounted payback period method fail to recognize due to this theoretical deficiency? $1,577,761$3,759,579$5,792,637$1,974,455

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