Answer:
It will take 3 years and 55 days to cover the initial investment.
Explanation:
Giving the following information:
Cash flows= $1,350
Initial investment= $4,250
<u>The payback period is the time required to cover the initial investment:</u>
<u></u>
Year 1= 1,350 - 4,250= -2,900
Year 2= 1,350 - 2,900= -1,550
Year 3= 1,350 - 1,550= -200
Year 4= 1,350 - 200= 1,150
<u>To be more accurate:</u>
(200 / 1,350)= 0.15*365= 55 days
It will take 3 years and 55 days to cover the initial investment.