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# The LoveLivingInParadise Company wants to calculate how long it will take to recover their initial investment on a project, Project X.

The LoveLivingInParadise Company wants to calculate how long it will take to recover their initial investment on a project, Project X. It is assumed that the estimated cash flows are received evenly throughout the year.

Cost 100,000

Year 1 $53,000

Year 2 $42,000

Year 3 $30,000

Year 4 $ 100,000

a) (5 pts) What is the payback period? (Give partial year to two decimal places. **SHOW ALL WORK FOR FULL CREDIT).**

b) (2 pts) Compared to another project, Project Y, with a payback period of 3 years, which project should be chosen?

c) (3) In evaluation of Project X, what is the primary drawback of the payback method?