Respuesta :
Answer:
1. 5.8 years
2. No
Explanation:
1. In the payback, we analyze in how many years the invested amount is recovered. The computation is shown below:
In year 0 = $58,000 + $8,000 = $66,000
In year 1 = $4,000
In year 2 = $8,000
In year 3 = $11,000
In year 4 = $14,000
In year 5 = $17,000
In year 6 = $15,000
and so on
If we sum the first 5 year cash inflows than it would be $54,000
Now we deduct the $54,000 from the $66,000 , so the amount would be $12,000 as if we added the sixth year cash inflow so the total amount exceed to the initial investment. So, we deduct it
And, the next year cash inflow is
he management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 58,000 $ 4,000 2 $ 8,000 $ 8,000 3 $ 11,000 4 $ 14,000 5 $ 17,000 6 $ 15,000 7 $ 13,000 8 $ 11,000 9 $ 10,000 10 $ 10,000(1) Determine the payback period of the investment. (2) Would the payback period be affected if the cash inflow in the last year were several times as large?
Respuesta :
15,000So, the payback period equal to
= 5 years + $12,000 ÷ $15,000
= 5.8 yeas
In 5.8 yeas, the invested amount is recovered.
2, No, it does not affect the last year cash flow as the full amount is recovered in 5.8 years
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