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Item 1

Exercise 12-1 (Algo) 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	$ 66,000	$ 5,000
2	$ 6,000	$ 10,000
3		$ 20,000
4		$ 17,000
5		$ 20,000
6		$ 18,000
7		$ 16,000
8		$ 14,000
9		$ 13,000
10		$ 13,000

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?