Answer:
Instructions are below.
Explanation:
Giving the following information:
Io= -$80,000
Investment X:
Year 1= $20,000
Year 2= $25,000
Year 3= $20,000
Year 4= $25,000
Year 5= $20,000
Investment Y:
1= $40,000
2= $30,000
3= $15,000
<u>The payback period is the number of years and days that takes to recover the initial investment.</u>
Payback period Investment X:
Year 1= 20,000 - 80,000= -60,000
Year 2= 25,000 - 60,000= -35,000
Year 3= 20,000 - 35,000= -15,000
Year 4= 25,000 - 15,000= 10,000
To calculate the days:
15,000/25,000= 0.6*365= 219 days
It will take 3 years and 219 days to recover the initial investment.
Payback period Investment Y:
Year 1= 40,000 - 80,000= -40,000
Year 2= 30,000 - 40,000= -10,000
Year 3= 15,000 - 10,000= 5,000
To calculate the days:
10,000/15,000= 0.67*365= 245 days
It will take 2 years and 245 days.
