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The conventional payback period ignores the time value of money, and this concerns Blue Hamster's CFO. He has now asked to compute Alpha's discounted payback

The conventional payback period ignores the time value of money, and this concerns Blue Hamster's CFO. He has now asked to compute Alpha's discounted payback period,assuming the company has a 9% cost of capital. complete the table.

Year 0 Year 1 Year 2 Year 3

Cash flow -5000000 2,000,000 4,250,000 1,750,000

Discounted cash flow ? ? ? ?

Cumulated discounted cash flow ? ? ? ?

Discounted payback period ?

How mch value does the discounted payback period method fail to recognize due to this theoretical deficiency?

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