Answer:
It will take 4 years and 269 days to cover for the initial investment.
Explanation:
Giving the following information:
An investment project costs $10,000 and has annual cash flows of $2,920 for six years.
The payback period is the time required for the cash flows to cover the initial investment.
Cf1= 2,920 - 10,000= -7,080
Cf2= 2,920 - 7,080= -4,160
Cf3= 2,920 - 4,160= -1,240
Cf4= 2,920 - 1,240= 1,680
To be more accurate:
(1,240/1,680)*365= 269
It will take 4 years and 269 days to cover for the initial investment.
