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:

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?

YearInvestment Cash Inflow $6,000 $12,000 $18,000 $17,000 $20,000 $18,000 $16,000 $14,000 $10,000 $13,000 $75,000 s 7,000 10