Beyer Company is considering the purchase of an asset for $230,000. It is expect

Question

Beyer Company is considering the purchase of an asset for $230,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year Year 1 $53,000 $35, 000 $64,000$150,000 $26,000 $328,000 Year 4 Year 5 Total Net cash flows Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.) Cash inflow Cumulative Net Cash Inflow (Outflow) Year Outflow) (230,000) 4 Payback period

Explanation / Answer

Year Cash Inflow (Outflow) Cumulative Net Cash Inflow (Outflow) 0 ($230,000) ($230,000) 1 53,000 -177,000 2 35,000 -142,000 3 64,000 -78,000 4 150,000 72,000 5 26,000 98,000 98000 Payback period = 3.52 years

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