MindTap Cengage Learning Internet Explorer Mind entire table Year 0 Year 1 Year

Question

MindTap Cengage Learning Internet Explorer Mind entire table Year 0 Year 1 Year 2 Year 3 Cash flow Discounted cash flow Cumulative discounted cash flow -5,000,000 2,000,000 4,250,000 1,750,000 Discounted payback period: ] Which version of a project's payback period should the CFO use when evaluating Project Sigma, given its theoretical superiority? O The discounted payback period O The regular 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 does the discounted payback period method fail to recognize due to this theoretical deficiency? O $1,428,521 O $2,009,795 O $3,297,680 O $5,140,636 MindTap links-2016-PMindTap- Cengage

Explanation / Answer

1) discounted payback method

2) $ 3,000,000 ( required rate is not given)

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