Payback, even and uneven cash flows. You have the opportunity to expand your business by purchasing new equipment for $159,000. You expect to incur fixed costs of $96,000 per year to use this new equipment, and you expect to incur variable costs in the amount of approximately 10% of annual revenues. REQUIRED 1. Calculate the payback period for this investment assuming you will generate $140,000 in cash revenues every year. 2. Assume you expect the following revenue stream for this investment:

Based on this estimated revenue stream, what is the payback period for this investment?LO1

Transcribed Image Text:

Year 1: $ 90,000 Year 4: 155,000 Year 2: 115,000 Year 5: 170,000 Year 7: 140,000 Year 8: 125,000 Year 3: 130,000 Year 6: 180,000 Year 9: 80,000