David is considering purchasing a new point-of-sale computer system for his restaurant. The computer system will allow servers to process orders more quickly, plus it will easily integrate with his inventory management system. The new computer system will cost David $29,400 to purchase and setup. The expected net cash flow from savings is shown below.

 Year          Expected Net Cash Flow            

 0                         $-29,400

 1                          $5,100 

 2                          $7,500 

 3                          $8,600 

 4                         $8,500 

 5                         $6,200 

Find the cumulative net cash flow . Using the payback method, in what year will David recover his investment?

 

Answer rating: 100% (QA)

To calculate the cumulative net cash flow we need to sum up the e... View the full answer