Answer:
d. 5 years
Explanation:
* Assuming Simple payback has been asked in the question rather discounted.
Initial Cost = $2,000,000
Cash inflows = $400,000 per year
Interest rate = 12%
Payback = Initial cost / Cash inflow
Payback = $2,000,000 / $400,000 per year
Payback = $2,0 / $4 per year
Payback = 5 years
So, the payback period of this equipment is 5 years.
