MCQ Detailed View

The formula for Payback Period is:

Payback Period=Prior Years to Recovery+Uncovered Cost at Start of YearCash Flow During Recovery Year\text{Payback Period} = \text{Prior Years to Recovery} + \dfrac{\text{Uncovered Cost at Start of Year}}{\text{Cash Flow During Recovery Year}}Payback Period=Prior Years to Recovery+Cash Flow During Recovery YearUncovered Cost at Start of Year

So,

Payback Period=4+300650=4+0.46=4.46 years\text{Payback Period} = 4 + \dfrac{300}{650} = 4 + 0.46 = 4.46 \text{ years}Payback Period=4+650300=4+0.46=4.46 years