Question

Exercise 24-1 Payback period computation; uneven cash flows LO P1 Beyer Company is considering the purchase of an asset for $400,000. It is expected to produce the following net cash flows. The cash flows occur evenly within each year. Year 1 $80,000 Year 2 $80,000 Year 3 $70,000 Net cash flows Year 4 $200,000 Year 3 $15,000 Total $445,000 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.) Year Cash inflow (Outflow) Cumulative Net Cash Inflow (Outflow) 0 $ (400,000) Payback period

Answer 1

Years	Cash inflow (outflow)	Cumulative net cash inflow (outflow)
0	($400,000)	($400,000)
1	$80,000	($320,000)
2	$80,000	($240,000)
3	$70,000	($170,000)
4	$200,000	$30,000
5	$15,000	$45,000
	Payback Period	3.85