The management of Unter Corporation, an architectural design firm, is considering an investment with the following ash flows: Year Investment Cash Inflow 1 $ 61,000 2 $5,000 3 4 5 6 7 8 9 10 $3,000 $6,000 $ 12,000 $ 13,000 $ 16,000 $ 10,000 $ 8,000 $10,000 $9,000 $9,000 Required: 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?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
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The management of Unter Corporation, an architectural design firm, is considering an investment with the following
cash flows:
Year
L234567899
10
Investment Cash Inflow
$ 61,000
$5,000
$3,000
$6,000
$ 12,000
$ 13,000
$ 16,000
$ 10,000
$ 8,000
$ 10,000
$9,000
$9,000
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?
Transcribed Image Text:The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows: Year L234567899 10 Investment Cash Inflow $ 61,000 $5,000 $3,000 $6,000 $ 12,000 $ 13,000 $ 16,000 $ 10,000 $ 8,000 $ 10,000 $9,000 $9,000 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?
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