Ch $10$: Assignment $-$ The Basics of Capital Budgeting: Evaluating Cash Flows

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

Consider the case of Cold Goose Metal Works Inc.:

Cold Goose Metal Works 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 Delta's expected future cash flows. To answer this question, Cold Goose'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 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 the nearest two decimal places. If your answer is negative use a minus sign.$)$

$\backslash$table$[[,$Year $0,$Year $1,$Year $2,$Year $3],[$Expected cash flow,$-$$$6,000,000,$$$2,400,000,$$$5,100,000,$$$2,100,000$