24 8 Dalk i0 Assignment Attempts 6. The payback period Keep the Highest / 4 The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Consider the case of Blue Hamster Manufacturing Inc.: Blue Hamster Manufacturing Inc. 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 Delta's expected future cash flows. To answer this question, Blue Hamster's CFO has asked that you compute the project's payback period using the following expected net cash flows 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, complete the entire table. (Note: Round the conventional payback period to two decimal places. If your answer is negative, be sure to use a minus sign in your answer.) Expected cash flow Cumulative cash flow Conventional payback period: 5 Year 0 -$6,000,000 years 15 Year 1 $2,400,000 $ Year 2 $5,100,000 $ Year 3 $2,100,000 MINA The conventional payback period ignores the time value of money, and this concerns Blue Hamster's CFO. He has now asked you to compute Delta's discounted payback period, assuming the company has a 10% cost of capital. Complete the following table and perform any necessary calculations. Round the discounted cash flow values to the nearest whole dollar, and the discounted payback period to two decimal places. For full credit, complete the entire table. (Note: If your answer is negative, be sure to use a minus sign in your answer.) A

Atternpts Keep the Highest /4 6. The payback period The payback method helos firms establish and identify a maximum acceptable parbock period that helps in their capital budpeting decisions. Coisider the case of Elue Hamster Manulacturing Inc: Blue Hamster Manufacturing inc is a small firm, and several of its managers aro worried about how soon the firm will be able to recover its initial investment from Project Delta's expected future cash flows. To answer this question, Blue Hamster's CFO has asked that you compute the project's payback period using the following expected net cash flows and assuming that the cash flows are received evenly througheut each year. Complete the following table and compute the project's conventional paybeck period, For full credit, complete the entire table. (Note: Round the convectional parback period to two dedimal places. If vour answer is negative, be sure to use a minus sion in rour answer.) diccunted parback period, atsiming vie company has a 10% cost of capital, Complete the following table und perform any necessarr calculations