The payback method helps firms establish and Identify and maximum acceptable payback. That helps their capital budgeting decision. Consider the case of green caterpillar gardens supplies Inc

The payback method helps fims establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions: Consider the case of Green Caterpillar Garden Supplies Incit Green Caterpilar Garden Supplies Inc. is a small firm; and several of its manogers are worried about how soon the firm will be able to recover its inibial investment from Project. Alpha's expected future cash fiows, To answer this question, Green Caterpillar's ofo has asked that you compute the project's payback period using the following expected net cash fiows 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, cormplete the entire table. (Notei Round the conventional payback period to the nearest two decimal places. If your answer is negative use a minus sign.) The cooventional payback period ignores the time value of money, and this concems Oreen Caterpillaris CFo, He has now asked vou to campute Apha's diacounted payback period, assurning the company has a 94 cost of capital. Complete the following table and perform any neciessary calculations. Round the discounted cash flow values to the nearent whole dollar, and the discounted payback period to the nearest tris decirnal places. For full credit, cornplete the entire table. (Note: If vour antwer in negative use a minus sign.) Which version of a project's payback period should the CFo use when evaluating Project Apha, given its theoretical superionty? The discounted paptack periot The regular paytack period flows beyond the point in tirve equal to the paybock period. How much value does the discounted payback peried method fal to recognize due to this theoretical deficleficy? Complete the following table and compute the project's comventional payback period. For full credit, complete the entire table. (Noter Round the comventional payback period to the nearest two decimal places. If your answer is negative use a minus sign.) The conventional payback period ignores the time value of money, and this concerns Green Caterpillar's CFO. He has now asked you to compute Alpha's discounted payback period, assuming the company has a 9% cost of capital. Complete the following table and perform any necessary calculations. Round the discountied cash flow values to the nearest whole dollar, and the discounted payback period to the nearest tivo decimal place For full credit, complete the entire table. (Note: If your answer is negative use a minus sign.) Which version of a project's payback period should the CFO use when evaluating Project Alpha, given its theoretical superionity? The discounted payback period The regular 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 paybsck period method fail to recognize due to this theoretical deficiency? $2,867,565 $3,435,615 $1,216,169 51,586,591