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7. The NPV and payback periodWhat information does the payback period provide?Suppose you are evaluating a project with the expected futurecash inflows shown in the following table. Your boss has asked youto calculate the project’s net present value (NPV). You don’t knowthe project’s initial cost, but you do know the project’s regular,or conventional, payback period is 2.50 years.YearCash FlowYear 1$275,000Year 2$500,000Year 3$450,000Year 4$450,000If the project’s weighted average cost of capital (WACC) is 9%,the project’s NPV (rounded to the nearest dollar) is:a.$288,496b.$305,466c.$407,288d.$339,407Which of the following statements indicate a disadvantage ofusing the regular payback period (not the discounted paybackperiod) for capital budgeting decisions? Check all that apply.a.The payback period is calculated using net income instead ofcash flows.b.The payback period does not take the time value of money intoaccount.c.The payback period does not take the project’s entire lifeinto account.