The management of Weimar, Inc., a civil engineering design company, is consideri
ID: 2417914 • Letter: T
Question
The management of Weimar, Inc., a civil engineering design company, is considering an investment in a high-quality blueprint printer with the following cash flows
Determine the payback period(in ears) the investment (round to one decimal place)________
Year Investment Cash Inflow 1 $38,000 $2,000 2 $6,000 $4,000 3 $8,000 4 $9,000 5 $12,000 6 $10,000 7 $8,000 8 $6,000 9 $5,000 10 $5,000 1.Determine the payback period(in ears) the investment (round to one decimal place)________
2. Would the payback period be affected if the cash inflow in the last year were several times larger?Explanation / Answer
Total Investment = 38,000 +6,000 = 44,000 PBP Time Amount Cumulative 1.00 2,000.00 2,000.00 2.00 4,000.00 6,000.00 3.00 8,000.00 14,000.00 4.00 9,000.00 23,000.00 5.00 12,000.00 35,000.00 6.00 10,000.00 45,000.00 7.00 8,000.00 53,000.00 8.00 6,000.00 59,000.00 9.00 5,000.00 64,000.00 10.00 5,000.00 69,000.00 Amount at end ofyear 5 35,000.00 Total Investment 44,000.00 Amount reqd in 6th year 9,000.00 PBP= 5 + 9000/10,000 PBP= 5.9 Years No since the payback period is less than 9 Years
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