Beyer Company is considering the purchase of an asset for $370,000. It is expected to produce the following net cash flows. The

Question

3 years ago

5

Beyer Company is considering the purchase of an asset for $370,000. It is expected to produce the following net cash flows. The

cash flows occur evenly within each year. Year 1 Year 2 Year 3 Year 4 Year 5 Total Net cash flows $ 86,000 $ 49,000 $ 70,000 $ 300,000 $ 12,000 $ 517,000 Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal place.)

Business

1 answer:

Alenkasestr [34] · Answer 1 · 2022-04-13T05:49:38+03:00

Answer:

3.55 years

Explanation:

The payback period is the length of time it takes for Beyer Company to recoup the initial investment of $370,000.

In other words, the number of years for the net cash flows of the project to equate the initial investment amount of $370,000 as shown in the attached excel file for Beyer company's payback computation

Download xlsx