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

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The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Green Caterpillar Garden Supplies Green Caterpillar Garden Supplies is a small firm, and several of its managers are worried about how soon the firm will be able to recover its initial investment from Project Beta's expected future cash flows. To answer this question, Green Caterpillar's CFO has asked that you compute the project payback period using the following expected at cash flows and assuming that the cash flows are receved evenly throughout each year. Complete the following table and compute the project's conventional payback period. (Note: rollerner, complete the entire table. Round the conventional payback period to the nearest two decimal place your answer is negative minus sign.) Yeart Vaar Year 16,000,000 Erbe show Years 3.100.000 52.450,000 55,100,000 van The conventional payback periodore the time value of money and this concerns Green Caterpillar CFO. He has now asked you to compute eta discounted payback period, asuming the company cost of capital Comte the following table and perform any necessary calculations Note: Round the discounted cash flow values to the nearest whole dollar, and the counted paytack period to the nearest two decimal places. For full credit, complete the entire table. If your answer is negative minus sign) Year! Year YAO 16,000,000 Yes 12.400.000 Cashow med att 45.100.000 2.100.000 (Note: Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to the nearest two decimal places. For full credit, complete the entire table. If your answer is negative use a minus sign.) Year o Year 1 Year 2 $5,100,000 Year 3 $2,100,000 -56,000,000 $2.400,000 Cash flow Discounted cash flow Cumulative discounted cash flow Discounted stock period which version of a project's payback period should the Crouse when evaluating Project Beta, given its theoretical superiority o the regular payback period The discounted payback period One theoretical disadvantage of both payback methods-compared to the net present value methods that they fail to consider the value of the cash flows beyond the point in time equal to the puyback period. How much value does the discounted payback period method fail to recognize due to this theoretica de coney! 51,714,220 17.411.755 16.168.764 33.957,212

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