21Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the following net cash flows. The cashflows occur evenly within each year.Net cash flowsYear012345Cash Inflow(Outflow)Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round yourPayback Period answer to 2 decimal place.)S(210,000)Year 1$64,000Payback period =Year 2 Year 3Year 4$33,000 $62,000 $150,000Cumulative NetCash Inflow(Outflow)Year 5$28,000SavedTotal$337,000

Payback period is the period within which the company recovers its investment amount in a project.

Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the following net cash flows occur evenly within each year. Net cash flows Year 1 $64,000 Year 2 $33,000 Year 3 $62,000 Year 4 $150,000 Year 5 $28,000 Total $337,000

Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the following net cash flows occur evenly within each year. Net cash flows Year 1 $64,000 Year 2 $33,000 Year 3 $62,000 Year 4 $150,000 Year 5 $28,000 Total $337,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 18EB: Garnette Corp is considering the purchase of a new machine that will cost $342,000 and provide the...

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Question

21
Beyer Company is considering the purchase of an asset for $210,000. It is expected to produce the following net cash flows. The cash
flows occur evenly within each year.
Net cash flows
Year
0
1
2
3
4
5
Cash Inflow
(Outflow)
Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your
Payback Period answer to 2 decimal place.)
S
(210,000)
Year 1
$64,000
Payback period =
Year 2 Year 3
Year 4
$33,000 $62,000 $150,000
Cumulative Net
Cash Inflow
(Outflow)
Year 5
$28,000
Saved
Total
$337,000

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