To calculate the payback period, we need to find the time it takes for the cumulative cash inflows to equal the initial investment.
Year 1: $20,000
Year 2: $20,000 + $70,000 = $90,000
Year 3: $90,000 + $110,000 = $200,000
Year 4: $200,000 + $200,000 = $400,000
The cumulative cash inflows equal the initial investment of $400,000 in Year 4. Therefore, the payback period is 4 Years.