Question: Goose'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

 Goose's CFO has asked that you compute the project's payback period

Goose'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. Year 3 Year 2 Year 0 Year 1 $1,750,000 $4,250,000 $1,250,000 $2,000,000 -5,000,000 Expected cash flow $3,000,000 -$5,000,000 - $ 3,000,000 Cumulative cash flow 1.71 years Conventional payback period: The conventional payback period ignores the time value of money, and this concems Cold Goose's CFO. He has now asked you to compute Beta's discounted payback period, assuming the company has a 9% 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 the nearest two decimal places. For full credit, complete the entire table. Year 2 Year 3 Year 0 Year 1 Cash flow $2,000,000 $4,250,000 $1,750,000 -5,000,000 -5,000,000 -5,000,000 Discounted cash flow Cumulative discounted cash flow Discounted payback period: Which version of a project's payback period should the CFO use when evaluating Project Beta, given its theoretical superiority? O The discounted payback period O The reqular 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 in this example does the discounted payback period method fail to recognize due to this theoretical deficiency? O $4,928,461 O $1,351,321 O $3.186.183 O $1,763,323

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