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Baird Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual
Baird Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on demand. Baird would sell it at the end of the fifth year of its useful life. The expected cash inflows and outflows follow Year Nature of Item Cash Inflow Cash Outflow 2018 Purchase price $79,800 2018 Revenue $ 31,000 Revenue 31,000 2020 Revenue 26,000 2020 Major overhaul 8,200 2021 Revenue 17.000 2022 Revenue 15, eee 2022 Salvage value 2019 Required 0.8b. Determine the payback period using the accumulated and average cash flows approaches. (Round your answers to 1 decimal place) year Payback period (accumulated cash flows) b. Payback period (average cash flows) year
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