Question
complete the entire table. The conventional payback period period ignores the time value of money, and this concerns Cute Camel's CFO. He has not asked
complete the entire table. The conventional payback period period ignores the time value of money, and this concerns Cute Camel's CFO. He has not asked you to compute Delta's discounted payback period, assuming the company has 10% cost of capital. Complete the following table and perform the necessary calulcations. Round the discounted cash flow values to the nearest whole dollar and the discounted payback period to the nearest two decimals places. Which version of the project's payback period should the CFO use when evaluating Project Delta, given its theoretical superiority? A. The refular payback period B. The discounted payback 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 payback period. How much value does the discounted payback period method fail to recognize due to this theoretical deficiency? A. $2,819,685 B. $1,480,842 C. $4,4344,478 D. $1,183,321
Year 0 Year 1 Year 2 Year 3 4,500,000 $1,8 Cash flow Discounted cash flow Cumulative discounted cash flow $1,800,000 $3,825,000 $1,575,000 Discounted payback period
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