Pad 11:24 AM Question 1 (of 11) ? save & Exit | Submit | 4.00 points The managem
ID: 2554252 • Letter: P
Question
Pad 11:24 AM Question 1 (of 11) ? save & Exit | Submit | 4.00 points The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: YearInvestment Cash Inflow $6,000 $12,000 $21,000 $22,000 S25,000 $23,000 $21,000 $19,000 $18,000 $18,000 $71,000 $ 4,000 10 Required: 1. Determine the payback period of the investment. (Round your answer to 1 decimal place.) years 2. Would the payback period be affected if the cash inflow in the last year were several times as large? Yes O NoExplanation / Answer
Answer:
Year
Investment
Cash
Flow
Uncovered
Investment
1
71000
6000
65000
2
4000
12000
57000
3
21000
36000
4
22000
14000
5
25000
0
6
23000
0
7
21000
0
8
19000
0
9
18000
0
10
18000
____
0
The payback period is approximately
= 4 year + (14000/25000)
=4 +0.56
=4.56 year
The payback period is approximately =4.56 year
_____________________________________________
2
would the payback period be affected if the cah inflow in the last year were several times as large
Answer: NO
Year
Investment
Cash
Flow
Uncovered
Investment
1
71000
6000
65000
2
4000
12000
57000
3
21000
36000
4
22000
14000
5
25000
0
6
23000
0
7
21000
0
8
19000
0
9
18000
0
10
18000
____
0
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