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 Year Investm...

1 The payback period is determined as follows Year Investment Cash Inflow Unrecovered Investment 1 ...

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash

Question:

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:

Year Investment Cash Inflow $15,000 S1,000 $2,000 $8,000 S2,500 4 $4,000 $5,000 $6,000 $5,000 $4,000 S3,000 10 $2,000 2.

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?

Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...