Answer:
C. 4.29 years
Explanation:
The computation of the payback period is shown below:
Payback period = Initial investment of the equipment ÷ Cash flows
where,
Initial investment = $30,000
And, the cash flows is
= $8,500 - $1,500
= $7,000
So the payback period is
= $30,000 ÷ $7,000
= 4.29 years
By dividing the initial investment by the cash flows we can get the payback period and the same is applied above.
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So 14 miles per gallon of gas
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