DYMO Label EPM Botic, Almira (SFS-DSM) ox Tell me what you want to do Share d Replace 1. Payback Period (Uneven cash flows) When the annual cash flows are unequal, the payback period is computed by adding the annual cash flos such time.as the original investment is recovered. If a fraction of a year is needed, it is assumed that cash flows occur evenly within each year The steps for determining the payback period with uneven cash flows is as follows: 1. Add the annual cash flows to one another until the investment is recovered. 2. For each full year's worth of cash flows consumed, add that year to your calculation for total payback years. 3. If you arrive at a point where only part of the year's cash f flows are needed, only add the fraction of the years cash flows relevant to recovering the initial investment to the total payback years. 4. If the unrecovered investment is greater than the annual cash flow, the payback period is "1". If the unrecovered investment is less than the annual cash flow the time needed for payback is computed by dividing the unrecovered investment by the annual cash flow for than year. + Explanation of Time Needed for Payback with uneven cash flows Note: For each year in in which the annual cash flow exceeds the unrecovered investment, this is the unrecovered investment dirvided by the annual cash flow for that year which the unrecovered investment meets or exceeds the annual cash flow, this is 1. For yhars Then If Time Needed for Payback Unrecovered 2 Cash Flow Annual 1 year Annual Cash Flow Time Needed for Payback unrecovered Annual Cash Flow for the Year Investment capital outlay of $100,000 and the uneven annual cash flows for each year are provided in the table. If an amount is zero, enter "0". For the time needed for payback, enter your answer to one decimal place, it less than one year (i.e. 0.2, 0.5, etc.). Time Needed for Payback Annual Cash Flow 01 PM (Beginning of year) O Find - . | 2-B. I 1 Normal 11 No Spac." Replace Cy Select. Share WebEx Heading 1 Heading 2 Heading 3 Title Styles Unrecovered Investment Annual Time Needed for Payback Investment SCash Flow Annual Cash Flow for the Year Compute the time needed for payback for the following example assuming the investment required an up front capital outlay of $100,000 and the uneven annual cash flows for each year are provided in the table. If an amount is zero, enter "O". For the time needed for payback, enter your answer to one decimal place, if less than one year (i.e. 0.2, 0.5, etc.) Unrecovered Investment (Beginning of year) $100,000 Annual Cash Flow Time Needed for Payback Year 1 year $10,000 20,000 30,000 40,000 50,000 aI Total time needed for payback (to the nearest tenth of a year)