he management of Unter Corporation, an architectural design firm, is considering

Question

he management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow $31, 000 $4, 000 $2,000 $4, 000 $8, 000 $9,000 $12, 000 $10, 000 $8, 000 $6, 000 $5, 000 $5, 000 10 Required 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? Complete this question by entering your answers in the tabs below Required 1 Required 2 Determine the payback period of the investment. (Round your answer to 1 decimal place.) Payback period years

Explanation / Answer

1. The payback period is determined as follows:

The payback period is 5 years.

2. No

Investment Cash Inflow Unrecovered Investment 1 $31,000 $2,000 $29,000 2 $4,000 $4,000 $29,000 3 $8,000 $21,000 4 $9,000 $12,000 5 $12,000 $0 6 $10,000 $0 7 $8,000 $0 8 $6,000 $0 9 $5,000 $0 10 $5,000 $0

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