a) Exercise 1: What is the payback period in years? Round to two places beyond the decimal place. See circle on the printed exercise.

EXERCISE 1: Becker Industries is considering investing in new navigation system equipment for its trucking fleet. The initial investment is $180,000 and is expected to result in unequal net cash flows over the next 8 years. The equipment is expected to have a salvage value of $20,000 at the end of its useful life. Calculate the Payback Period assuming the following net cash inflows: Amount Invested Net Cash Inflows Accumulated $180,000 Year 0 $35,000 1 2 35,000 35,000 30,000 30,000 30,000 30,000 25,000 20,000 $270,000 3 4 6 7 Salvage Value TOTAL Payback occurs somewhere between years and You can also calculate Payback using the average of cash flows Total cash inflows Divide by: 8 /8 Average Amount Invested $ Net Cost of Investment Divide by: Average Amount Invested (ABOVE) Payback (round to two places beyond the decimal. 0.00) years