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The parback method helps firms extabith and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cute

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The parback method helps firms extabith and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Cute Camel Woodoraft Company? Cute Camel Woodcraht Company is a small firm, and several of its managers are womed about bow soon the firm will be able to recover its inital inveatment from Project Sigma's expected future cash flows. To answer this question, Cute Camel's cro has asked that you compute the project's paybed period using the following expected net cash flows and assuming that the cash fiows are received evenly throughout each yeat. Conviete the folowing table and compute the project's conventional perback penod. For full dedit, complete the ertire table. (Note: Round the conventional perback period to two deomal places. If your answer is negative, be sure to use a minus sign in your answer) Be entire culle. (Note: II rour arewer is negative, be ture to use a minus sign in hour arowec) Which version of a project't payback penod should the CFo use when evaluating Project Sigma, given its theoretical superionity? The regular payback perind The discounted payback period One theoretical disadvantage of bath payback methods-compared to the net present value method-15 that they fail to consider the value of the cash fiows beyond the peint in time equal to the payback period. How much value in this example does the discounted payback period method fail to recognize due to this theoretical deficiency? 4,106,143 b1,763,323: 14,928,461 $1,351,321

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