Respuesta :
The amount of missing cash flow for the year 3 is $12,000 on the amount of investment of $36,000 made by Company K.
What is the payback period?
The payback period is one of the methods of capital budgeting that enables us to know the number of years in which the invested amount gets recovered. It is determined by dividing the cost of investment by the annual cash flows.
Given values:
Amount of investment: $36,000
Cash flow of Year 1: $9,000
Cash flow of Year 2: $12,000
Computation of cash flow for the third year:
[tex]\rm Payback \rm\ period= \rm \ Number \rm\ of \rm \ year \rm \ before \rm \ breakeven + \frac{\rm\ Cumulative \rm\ cash \rm\ flow \rm\ for \rm\ 2nd \rm\ year }{\rm\ Cash \rm\ flow\rm\ for \rm \ third \rm\ year } \\\rm 3.25 \rm\ years= \rm\ 2 \rm\ years + \frac{\$36,000-\$9,000-\$12,000}{\rm\ Cash \rm\ flow\rm\ for \rm \ third \rm\ year } \\\rm Cash\ \rm flow \rm\ for\rm \ third \rm\ year=\frac{\$15,000}{1.25 \rm\ years}\\\rm Cash\ \rm flow \rm\ for\rm \ third \rm\ year = \$12,000[/tex]
Hence, the amount of cash flow for the year 3 come out to be $12,000 by using the payback period formula.
To learn more about the payback period here:
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