Answered

Get comprehensive answers to your questions with the help of IDNLearn.com's community. Receive prompt and accurate responses to your questions from our community of knowledgeable professionals ready to assist you at any time.

Exercise 12-1 Payback Method [LO12-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 15,000 $ 1,000 2 $ 8,000 $ 2,000 3 $ 2,500 4 $ 4,000 5 $ 5,000 6 $ 6,000 7 $ 5,000 8 $ 4,000 9 $ 3,000 10 $ 2,000 Required: 1. Determine the payback period of the investment. 2. Would the payback period be affected if the cash inflow in

Sagot :

Anthougoidn

Question Completion:

Requirement #2 would the payback period be affected if the cash inflow in the last year were several times as large

Answer:

Unter Corporation

1. Payback period of the investment is:

= 7 years.

2. No. The payback period would not be affected if the cash inflow in the last year were several times as large.  The payback period was reached in the 7th year, which is three years before the last year. No cash inflows after the 7th year will have any impact on the payback period.

Explanation:

a) Data and Calculations:

Cash flows:

Year  Investment  Cash Inflow

1       $ 15,000           $ 1,000

2       $ 8,000          $ 2,000

3                              $ 2,500    

4                              $ 4,000

5                              $ 5,000

6                              $ 6,000

7                              $ 5,000   $25,500

8                              $ 4,000

9                              $ 3,000

10                            $ 2,000

Total  $23,000     $34,500

Thank you for contributing to our discussion. Don't forget to check back for new answers. Keep asking, answering, and sharing useful information. Your questions deserve reliable answers. Thanks for visiting IDNLearn.com, and see you again soon for more helpful information.