Question
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year Investment Cash Inflow 1 $ 68,000
The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
| Year | Investment | Cash Inflow | ||
| 1 | $ | 68,000 | $ | 7,000 |
| 2 | $ | 8,000 | $ | 14,000 |
| 3 | $ | 21,000 | ||
| 4 | $ | 22,000 | ||
| 5 | $ | 25,000 | ||
| 6 | $ | 23,000 | ||
| 7 | $ | 21,000 | ||
| 8 | $ | 19,000 | ||
| 9 | $ | 18,000 | ||
| 10 | $ | 18,000 | ||
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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Modern Auditing And Assurance Services
Authors: Philomena Leung, Paul Coram, Barry J. Cooper, Peter Richardson
6th Edition
1118615247, 9781118615249
