5)

Exercise 10-13A (Algo) Determining the payback period with uneven cash flows LO 10-4 Solomon Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on demand. Solomon would sell it at the end of the fifth year of its useful life. The expected cash inflows and outflows follow Cash Inflow Cash Outflow $90,660 Year Year 1 Year 1 Year 2 Year 3 Year 3 Year 4 Year 5 Year 5 Nature of Item Purchase price Revenue Revenue Revenue Major overhaul Revenue Revenue Salvage value $37. 37.NO 26,000 9,400 23,000 21,000 8,200 Required a.&b. Determine the payback period using the accumulated and average cash flows approaches. (Round your answers to 1 decimal ploce.) - Payback period (accumulated cash flows) b. Payback period (average cash flows) Activate