Answer:
3.17 YEARS
Step-by-step explanation:
Payback calculates the amount of time it takes to recover the amount invested in a project from it cumulative cash flows
Payback period = Amount invested / cash flow
Payback period for option A, Product A
Amount invested = –$221,117
Amount recovered in year 1 = –$221,117 + 27,200 = -193,917
Amount recovered in year 2 = -193,917 + 60,000 = -133,917
Amount recovered in year 3 = -133,917 + 60,000 = -73,917
Amount recovered in year 4 = -73,917 + 425,000 = 351,083
Payback period = 3 years + (73,917 / 425,000) = 3.17 years
