Question
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
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 | $ 71,000 | $ 6,000 |
| 2 | $ 4,000 | $ 12,000 |
| 3 | $ 21,000 | |
| 4 | $ 22,000 | |
| 5 | $ 25,000 | |
| 6 | $ 23,000 | |
| 7 | $ 21,000 | |
| 8 | $ 19,000 | |
| 9 | $ 18,000 | |
| 10 | $ 18,000 |
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?
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Intermediate Accounting IFRS Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
2nd Edition
1118443969, 978-1118443965
