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h 11: Assignment-The Basics of Capital Budgeting 7. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that
h 11: Assignment-The Basics of Capital Budgeting 7. The payback period The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cute Camel Woodcraft Company: Cute Camel Woodcraft Company is a small firm, and several of its managers are worried about how soon the fim will be able to recover its initial investment from Project Omega's expected future cash flows. To answer this question, Cute Camel'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 Year 0 Year 1 Year 2 Year 3 Expected cash flow Cumulative cash flow 4,000,000 $1,600,000$3,400,000 1,400,000 $400,000 Conventional payback period171 yeers The conventional payback period ighores the time va ue of money.nd th esked you to compute Omege's discounted payback p Complete the fo lowing table and performany n t whole dollor, and the disceunted payback penoc to the Year 0 Ye
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