Answer:
Location 1 : 5 years
Location 2 : 3 years
Explanation:
Cash payback period measures how long it takes for the amount invested in a project to be recovered from the cumulative cash flow.
For location 1,
The Payback period = amount invested/ cash inflow = $225,000 / $45,000 = 5 years
For location 2,
Of the $-225,000 invested, $101,000 is recovered. This would leave $-225,000 + $101,000 = $-124,000
In year 2, 77,000 is recovered. This would leave $-124,000 + 77,000 = $-47,000
In year 3, 47,000 is recovered. This would leave $-47,000 + 47,000 = 0
The Payback period is 3 years
I hope my answer helps you
