TravelCenters of America LLC is the largest full-service travel center company in the United States, serving both professional drivers and motorists. Since 2011, the company's growth strategy has been to acquire additional travel center and convenience center locations. In addition to agreements entered into in 2015, the company acquired 3 travel centers and 170 convenience centers for a total purchase price of $320.3 million.

Requirements

1. Using the payback method, suppose TravelCenters of America expects to receive annual net cash inflow of $32.03 million per year. How many years would it take to payback the initial investment?

2. What are some disadvantages to using the payback method? Why would a company, such as TravelCenters of America, not use the payback method as their sole method for making capital investment decisions?