Sentinel Company is considering an investment in technology to improve its opera

Question

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $253,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 3 years, and it requires a 8% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.)

Required:
1. Determine the payback period for this investment.
2. Determine the break-even time for this investment.
3. Determine the net present value for this investment.

Period Cash Flow 1 $ 48,500 2 52,500 3 76,400 4 95,600 5 126,900 Required 1 Required 2Required 3 Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback Period answer to 1 decimal place.) Cash inflow Cumulative Net Cash Inflow outflow) Year (outflow) s (253,000) Payback period Required 1Required 2 Required 3 Determine the break-even time for this investment. (Enter cash outflows with a minus sign. Round your break-even time answer to 1 decimal place.) Cash inflow outflow) Present Value of Cash Flows Cumulative Present Value of Year Table factor Cash Flows (253,000) Break-even time Required 1 Required3 > Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 Determine the net present value for this investment. Net t value

Explanation / Answer

1) the payback period for this investment

2) the break-even time for this investment.

3) the net present value for this investment

Year Cash Inflow (Outflow) $ Cumulative Net Cash Inflow (Outflow) $ 0 (253000) (253000) 1 48500 (204500) 2 52500 (152000) 3 76400 (75600) 4 95600 20000 5 126900 146900 Calculate the Payback Period: Payback Period between years: 3 and year 4 Calculate the portion of the year Numerator for Partial Year 75600 0.79 years Denominator for Partial Year 95600 PayBack Period = 3.79 years

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