he management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow 1 $1,900,000 $100,000 2 550,000 200,000 3 360,000 4 480,000 5 510,000 6 600,000 7 590,000 8 300,000 9 250,000
he management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow 1 $1,900,000 $100,000 2 550,000 200,000 3 360,000 4 480,000 5 510,000 6 600,000 7 590,000 8 300,000 9 250,000
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 6EA: The management of Kawneer North America is considering investing in a new facility and the following...
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The management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment:
| Year | ||
| 1 | $1,900,000 | $100,000 |
| 2 | 550,000 | 200,000 |
| 3 | 360,000 | |
| 4 | 480,000 | |
| 5 | 510,000 | |
| 6 | 600,000 | |
| 7 | 590,000 | |
| 8 | 300,000 | |
| 9 | 250,000 | |
| 10 | 250,000 |
a. what is the payback period of this uneven cash flow?
b. does your answer change if year 10's cash inflow changes to $500,000?
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