Asked Dec 11, 2019

The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:


Year Investment Cash Inflow
1 $ 58,000 $ 4,000
2 $ 8,000 $ 8,000
3     $ 11,000
4     $ 14,000
5     $ 17,000
6     $ 15,000
7     $ 13,000
8     $ 11,000
9     $ 10,000
10     $ 10,000



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?


Expert Answer

Step 1


Determine the payback peri...


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Investment Cash flow Uncovered Year in $ in S in $ 58,000 54,000 4,000 8,000 11,000 14,000 17,000 15,000 13,000 11,000 10,000 10,000 8,000 54,000 43,000 29,000 12,000 3 4 10 12,000 Payback period= 5+. 15,000 =5.8 years


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