The buyer would have a 12-day option to terminate the contract. Otherwise, he or she might not have any other option than to stick to the contract. (That is, the buyer will not have the unrestricted right to terminate the contract again.)
Discounted payback period calculates how long it takes for the amount invested in a project to be recovered from the cash flows generated from the project.
The calculation used in getting the answer is found in the attachment.