Question
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 60,000
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
| Year | Investment | Cash Inflow |
|---|---|---|
| 1 | $ 60,000 | $ 4,000 |
| 2 | $ 3,000 | $ 8,000 |
| 3 | $ 16,000 | |
| 4 | $ 17,000 | |
| 5 | $ 20,000 | |
| 6 | $ 18,000 | |
| 7 | $ 16,000 | |
| 8 | $ 14,000 | |
| 9 | $ 13,000 | |
| 10 | $ 13,000 |
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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Strategy, Value And RiskThe Real Options Approach
Authors: J. Rogers
2nd Edition
0230577377, 9780230577374
