chapter 10 question 6

Check my work Exercise 10-13A (Algo) Determining the payback period with uneven cash flows LO 10-4 Vernon 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, Vernon 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 $94,800 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 $38,500 38,500 27,500 9,700 24,500 22,500 8,500 Required a.&b. Determine the payback period using the accumulated and average cash flows approaches. (Round your answe decimal place.) swers to 1 years a Payback period (accumulated cash flows) b. Payback period (average cash flows) years HA