Chapter 12, Problem 12.1DI

To determine

Cash payback method:

Cash payback period is the expected time period which is required to recover the cost of investment. It is one of the capital investment method used by the management to evaluate the long-term investment (fixed assets) of the business.

In simple, the cash payback period is computed as follows:

$\text{Cash payback period =}\frac{\text{Cost of capital investment}}{\text{Net annual cash inflow}}$

To compute: The cash payback period for given data.