A new Xerox copier costing $400,000 has a life of 5 years with no salvage value. The facility will generate the following annual cash flows: Year Cash Flows 1 $120,000 2 $160,000 3 $200,000 4 $240,000 5 $280,000

Part A - Compute the payback period. Part B What are the disadvantages of using the payback period to analyze this investment?

Question #2 PARTA Initial Investment Yr 1 Cash flow Yr 2 Cash flow Yr 3 Cash flow Yr 4 Cash flow Yr 5 Cash flow PARTB