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Determine the payback period using the accumulated cash flow

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Reference no: EM132084619

Barker Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on demand. Barker would sell it at the end of the fifth year of its useful life. The expected cash inflows and outflows follow.

Year   Nature of Item Cash Inflow Cash Outflow
2015   Purchase price       $ 97,600  
2015   Revenue $ 39,500        
2016   Revenue   39,500        
2017   Revenue   28,500        
2017   Major overhaul         9,900  
2018   Revenue   25,500        
2019   Revenue   23,500        
2019   Salvage value   8,700        

Required

a.  Determine the payback period using the accumulated cash flows approach.

Reference no: EM132084619

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