Question

"What is the payback period for a $20,000 project that is expected to return $6,000 for the first two years and $3,000 for years three through five?"

Answer 1

4.67 years.

Step-by-step explanation:

PB = Years before cost recovery + (Remaining cost to recover ÷ Cash flow during the year)

= 4 + ($2,000 / $3,000)

= 4.67 years.