Answer:
The payback period of the investment is 6.5 years
Step-by-step explanation:
1. In order to calculate the payback period of the investment we would have to make the following calculation:
payback period of the investment=Year before full recovery+(Unrecovered cost at the start/cash flow during the year )
payback period of the investment=6+ ($23,000−$20,500) /$5,000
payback period of the investment=6.5 Years
The payback period of the investment is 6.5 years