A. Complete the following table and compute the projects 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.)

	Year 0	Year 1	Year 2	Year 3
Expected Cash Value	$ -4,500,000	$ 1,800,000	$ 3,825,000	$ 1,575,000
Cumulative Cash Flow	$	$	$	$
Conventional payback period	____ years	X	X	X

B. The conventional payback period ignores the time value of money, and this concerns Cold Gooses CFO. He has now asked you to compute Betas discounted payback period, assuming the company has a 8% 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.)

	Year 0	Year 1	Year 2	Year 3
Cash Flow	$- 4,500,000	$ 1,800,000	$ 3,825,000	$ 1,575,000
Discounted Cash Flow	$	$	$	$
Cumulative discounted cash flow	$	$	$	$
Discounted payback period	____ years	X	X	X

C. Which version of a projects payback period should the CFO use when evaluating Project Beta, given its theoretical superiority? (select one)

The discounted payback period

The regular payback period

D. How much value in this example does the discounted payback period method fail to recognize due to this theoretical deficiency? (select one)

$2,916,953

$1,250,286

$1,696,274

$4,529,607