The management of Unter Corporation, an architectural design firm, is considering an investment with the following cash flows:
Year Investment Cash Inflow
1 $ 73,000 $ 6,000
2 $ 6,000 $ 12,000
3 $ 20,000
4 $ 22,000
5 $ 25,000
6 $ 23,000
7 $ 21,000
8 $ 19,000
9 $ 18,000
10 $ 18,000
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?
