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

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The payback method helps firms establish and ldentify a maximum acceptable payback period that heips in their capital budgeting decisions. Consider the case of Cute Camel Woodcraft Companyt Cute Camel Woodcraft Company is a small firm, and several of its manogers are worried about how soon the firm will be able to recover its inital lavestrent from Project 5igma's expected future cash flows. To answer this question, Cutn Camels Cro has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash fows are recelved evenly throughout each yeat Complete the following table and compute the project's conventional payback period. For full credit, complete the entire table. (Note: Aound the coriventional payback period to two decimol places. If your answer is negative, be sure to use a minus sign in your answef.) The conventional paybsck periad ignores the time value of money, and this concerns Cute Cameis CFO, He has now asked you to compute 5 igmasy discountes paybsck period, assuming the company has a 9% cost of capital, Complete the following table ans perform any necessary caloulabiens. Round the discounted casti fiow values to the nearest whole doliar, and the docounted payback period to two decimal places. For fill credic, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) Which version of a project's paytack period should the Cro use when evaluating Project 5lgma, given its thearetical supenonty? The oiscounted paybock period. The regular payback period One theoretical disadvanzage of both paryback methods-compared to the net present value method-is that they fall to consider the value of mhe cash fons beyand the point in time equal to the payback period. How much value in this example does the discounted payback perlod method fail ta recognize due to this theoretical deficiency? $3,186,18351,351,32154,928,46151,763,323

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