Question

Sentinel Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $245,000 and will yield the following expected cash flows. Management requires investments to have a payback period of 4 years, and it requires a 8% 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
1		$	47,900
2			52,800
3			76,000
4			94,100
5			126,600

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.

	Year Cash inflow (outflow) Cumulative Net Cash Inflow (outflow) 0 $(245,000) 1 2 3 4 5 Payback period =

	Year Cash inflow (outflow) Table factor Present Value of Cash Flows Cumulative Present Value of Cash Flows 0 $(245,000) 1 2 3 4 5 Break-even time =

	Net present value

Answer 1