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Part 3: Exercise 14-1 (Algo) Payback Method [LO14-1] The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash
Part 3:
Exercise 14-1 (Algo) Payback Method [LO14-1]
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
Year | Investment | Cash Inflow | ||
1 | $ | 78,000 | $ | 5,000 |
2 | $ | 5,000 | $ | 10,000 |
3 | $ | 12,000 | ||
4 | $ | 15,000 | ||
5 | $ | 18,000 | ||
6 | $ | 16,000 | ||
7 | $ | 14,000 | ||
8 | $ | 12,000 | ||
9 | $ | 11,000 | ||
10 | $ | 11,000 | ||
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?
Required 1:
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