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Complete the following table and compute the project's conventional payback period. Round the payback period to the nearest two sure to complete the entire
Complete the following table and compute the project's conventional payback period. Round the payback period to the nearest two sure to complete the entire table-even if the values exceed the point at which the cost of the project is recovered. Expected cash flow Cumulative cash flow Conventional payback period: Year 0 -$6,000,000 $ Year 1 $2,400,000 $ years Year 2 $5,100,000 $ Year 3 $2,100,000 $ The conventional payback period ignores the time value of money, and this concerns Green Caterpillar's CFO. He has now asked you discounted payback period, assuming the company has a 7% cost of capital. discounted payback period to the nearest two decimal places. Again, be sure to complete the entire table-even if the values at which the cost of the project is recovered. Year 0 Year 1 Cash flow -$6,000,000 $2,400,000 Discounted cash flow $ $ Cumulative discounted cash flow $ $ Discounted payback period: years Year 2 $5,100,000 $ $ Year 3 $2,100,000 $ $ Which version of a project's payback period should the CFO use when evaluating Project Beta, given its theoretical superiority? The regular payback period The discounted payback period
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