Answer:
It will take 5.2 years to cover the initial investment.
Explanation:
<u>The payback period is the time required to cover the initial investment.</u>
year 1= 40,000 - 180,000= -140,000
Year 2= 40,000 - 140,000= -100,000
Year 3= 40,000 - 100,000= -60,000
Year 4= 25,000 - 60,000= -35,000
Year 5= 25,000 - 35,000= -10,000
Year 6= 50,000 - 10,000= 40,000
<u>To be more accurate:</u>
(10,000/50,000)= 0.2
It will take 5.2 years to cover for the initial investment.
