Exercise 13-1 Payback Method [LO13-1]

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:

Year	Investment		Cash Inflow
1	$	61,000	$	3,000
2	$	5,000	$	6,000
3			$	12,000
4			$	13,000
5			$	16,000
6			$	10,000
7			$	8,000
8			$	10,000
9			$	9,000
10			$	9,000

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?

1. Payback period___ years

2. Would the payback period be affected if the cash inflow in the last year were several times as large?

YES/NO