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The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment:
The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment:
| Year | Cash Outflow | Cash Inflow |
| 1 | $1,895,000 | $105,000 |
| 2 | 555,000 | 205,000 |
| 3 | 360,000 | |
| 4 | 480,000 | |
| 5 | 505,000 | |
| 6 | 600,000 | |
| 7 | 595,000 | |
| 8 | 295,000 | |
| 9 | 255,000 | |
| 10 | 250,000 |
A. What is the payback period of this uneven cash flow? Round your answer to 2 decimal places.
years
B. Does your answer change if year 10's cash inflow changes to $500,000?
The answer for part A will not change if the cash inflow in year 10 changes to $500,000.
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