Blue Hamster Manufacturing INC, 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 Sigma's expected future cash flows. To answer this question, Blue Hamster's CFO has asked that your compute the project's payback period using the following the expected net cash flows and assuming that the cash flows are received evenly throughout each year.

Completed the following table and compute the projects conventional payback period.

	Year 0	Year 1	Year 2	Year 3
Expected cash flow	-5,500,000	2,200,000	4,675,000	1,925,000
Cumulative cash flow
Conventional payback period

The conventional payback period ignores the time value of money, and this concerns Blue Hamsters CFO. He has now asked you to compute Sigma's discounted payback period, assuming the company has 10% 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 payback period to the nearest two decimals places,

		year 0	year 1	year 2	year 3
Cash Flow		-5,500,000	2,200,000	4,675,000	1,925,000
Discounted cash flow
Cumulative discounted cash flow
Discounted payback period

Which version of a projects' payback period should the CFO use when evaluting the project sigma, given its theorectical superiority?

A) The regular payback period

B)The discounted payback period

One theoretical disadvantages of both payback methods- compared to the net present value method- is that they fill to consider the value of the cash flows beyond the point in time equal to payback period.

How much values does the discounted payback period method fail to recognize due to this theoretical definency?

A. $3,446,281

B. 1,446,281

C. 1,809,917

D. 5,309,917