Cute Camel Woodcraft Company is a small firm, and several of its managers are worried abouthow soon the firm will be able to recover its initial investment from Project Delta's expected future cash flows. To answer this question, Cute Camel's CFO has asked that you compute the projects 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, cmplete 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 8% 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. 2,879,685

B. 1,480,842

C. 4,344,478

D. 1,183,321

Year 0 Year 1 Year 2 Year 3 4,500,000$1, Expected cash flow Cumulative cash flow $1,800,000 $3,825,000 $1,575,000 Conventional payback period: payback period