Question

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $253,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 3 years, and it requires a 10% return on investments. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the table provided.) Period Cash Flow $ 48,800 52,700 76,700 94,900 126,300 Required: 1. Determine the payback period for this investment. 2. Determine the break-even time for this investment. 3. Determine the net present value for this investment. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the payback period for this investment. (Enter cash outflows with a minus sign. Round your Payback period answer to 1 decimal place.) Year Cash inflow (outflow) Cumulative Net Cash Inflow (outflow) S (253,000) Payback period = Required 1 Required 2 >

Answer 1

Requisteld) Detenminadion ed Pay back Geniod tasr investment the Cashinflos lout Phw) (253,000) 48, 800 57o0 F6700 94,900 16300 Yean Cumulatue Net Cash in fha lautfl (a53,000) (204a00) IS1500) (74800) 20,/00 146,400 -3. 4 Tay back Penioc back fom dime equisres to n an s the the Carn mount inuesteal Cash loust ids ned asset 3 Yeaut 19 800 94100 Pay back Peniod 3year +&y ear 3.yearu Requiseal3) Cakcuhdtn af A et Paesent Value inveitmend Por the PU ot Cash in llows lar. 44359.2 43530 2 Cash flous $48 800 $ 52,700 $76,700 $91, 900 126,800 Years $48800x0.909 $52,700x 0.826 $76,700x0751 57601. $94,900 x 0.683 64816.7 78432.3 887401 11 2 $16,300x 0.61

total Pesent value of Cash inflous for 5yeaud a88740. the in vesd mend aYe Net Puesend Value- total eliscounteal Cah infbus aut Plous $887401- 253, 000 $25740. Requiotea( Caleulotien of Bneok even time NPV Year Cash inflow Table (out Plow) $(253,000) 48, 800 52,700 76,700 94,900 136, 200 Piesent velue Cumylotive focto et Cash tlowsPV ot Ceshfbus $(a53,000) (353,000) 44359.2 43 530.2 57601 7 64816.7 78432 3 (208640.8 (165,110.6) (107,508.9) (42 692.2) 357401 0.909 1 2 0.751 48ס 8.621 131ealk even dime= 4 Year t1269 2 2 18432 3 4Year+ even time .5years 3sealk