Question

It will cost $6,000 to acquire an ice cream cart. cart sales are expected to be $3,600 a year for three years. after the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. what is the payback period?

Answer 1

It will cost $6,000 to acquire an ice cream cart. cart sales are expected to be $3,600 a year for three years. after the three years, the cart is expectedto be worthless as the expected life of the refrigeration unit is only three years.
The payback period can be calculated as :

Payback period = $6,000/$3,600
Payback period = 1.67 years