The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
Year
Investment Cash Inflow
1
$15,000
$ 1,000
2
$ 8,000
$ 2,000
3
$ 2,500
4
$ 4,000
5
$5,000
6
$ 6,000
7
$5,000
8
$4,000
9
$ 3,000
10
$ 2,000
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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Required 1 Required 2
Determine the payback period of the investment.
Payback period
years