Ask Question
21 June, 14:32

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 31,000 $ 2,000 2 $ 4,000 $ 4,000 3 $ 8,000 4 $ 9,000 5 $ 12,000 6 $ 10,000 7 $ 8,000 8 $ 6,000 9 $ 5,000 10 $ 5,000 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?

+1
Answers (1)
  1. 21 June, 16:14
    0
    payback 5 years

    if the ltaer years cash flow increases several times, it would not affect the payback date. This is a disavantage of this method, it is focus on recover the investment without considering the total cash flow of the project.

    Explanation:

    Payback = the time in the life of a project on which the initial ivnestment is recover.

    -31,000 Balance

    Year 1 2,000 - 29,000

    Year 2 0 - 29,000

    Year 3 8,000 - 21,000

    Year 4 9,000 - 12,000

    Year 5 12,000 0

    At year 5 the proejct achieve payback
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers