II = $650,000 year 1 to 4 cash flow is $310,000, $330,000, $360,000, and $400,000. Calculate the years payback.

 

Answer: 2.027 years.

In computing the payback period we should divide the initial. Investment to annual cash flow we see in the data that the annual cash flow is uneven so we just need to add the year 1 to year 2 cash flow worth of 640,000 then we see that 10,000 is we need to cover in year 3 so we just need to compute the remaining months by just dividing the 10,000 to 360,000 0.027 months plus 2 years so the answer is 2.027.