The management of Weimar Inc., acivil engineering design company, is considering

Question

The management of Weimar Inc., acivil engineering design company, is considering an investment in ahigh-quality blueprint printer with the following cash flows:

Year

Investment

Cash
Inflow

1

$

13,000

$

500

2

$

8,000

$

1,500

3

$

3,500

4

$

5,000

5

$

5,000

6

$

5,000

7

$

5,000

8

$

2,500

9

$

3,000

10

$

1,500

Requirement 1:

Determine the payback period of theinvestment. (Round your answer to 2 decimalplaces.)

Payback period

years

The management of Weimar Inc., acivil engineering design company, is considering an investment in ahigh-quality blueprint printer with the following cash flows:

Explanation / Answer

Payback period = Amount of investment / Cash flows Add up all the cash flows until it's closest to your initialinvestment figure- in this case, the initial investment is $21,000.You'll end up a little over 6 years. i.e. when you add up cashflows from year 1 to 6, you'll have $20,500. You'll be $500 short.The $500 will be taken out of next year, and since that year has acash flow of $5000, you'll need to do $500/$5000 which gives you0.10. So your answer's 6.10 years. Please rate.

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