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The payback method helps firms establish and identify a maximum acceptable payback period that helps in their capital budgeting decisions. Puzzy Button Clothing Company 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 Beta's expected future cash flows. To answer this question, Fuzzy Button'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 by computing the project's conventional payback period. (Hint: For full credit, complete the entire table. Round the conventional payback period to the nearest two decimal places. If your answer is negative use a minus sign.) Year o -$5,000,000 Year 1 $2,000,000 Year 2 $4,250,000 Year 3 $1,750,000 Expected cash flow Cumulative cash flow Conventional payback period: 5 years The conventional payback period ignores the time value of money, and this concerns Puzzy Butto's cro. He has now asked you to compute Beta discounted payback period, assuming the company has a % cost of capital Complete the following table and perform any necessary calculations. (Hint: Round the discounted cash row values to the nearest whole dollar and the discounted payback period to the nearest two decimal places for full credit, complete the entire toute your answer is negative vie am sign.) Year o $5,000,000 Year 1 $2,000,000 Cash flow Discounted cash flow Year 2 54,250,000 Year 3 51,750,000 The conventional payback period ignores the time value of money, and this concerns Fuzzy Button's CFO. He has now asked you to compute Beta's discounted payback period, assuming the company has a 7% cost of capital. Complete the following table and perform any necessary calculations. (Hint: 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. If your answer is negative use a minus sign.) Year o -$5,000,000 Year 1 $2,000,000 Year 2 $4,250,000 Year 3 $1,750,000 S $ 5 Cash flow Discounted cash flow Cumulative discounted cash flow Discounted payback period: $ $ S 15 years Which version of a project's payback period should the CFO use when evaluating Project Beta, given its theoretical superiority? The discounted payback period The regular payback period One theoretical disadvantage of both eyback methods-compared to the net present value methods that they fail to consider the value of the cash flows beyond the point in time equal to the payback period. How much vate does the discounted paypack period method fall to recognize due to this theoretical deficiency? O $5,140,636 $2,009,795 $3,297,680 $1,425,521