First Choice Carpets Is Considering Purchasing New Weaving Equipment Costing

question 73

Multiple Choice

First Choice Carpets is considering purchasing new weaving equipment costing $730,000.The company's management has estimated that the equipment will generate cash inflows as follows: $$\begin{array} { | r | r | } \hline \text { Year 1 } & \$ 204,000 \\\hline 2 & 204,000 \\\hline 3 & 266,000 \\\hline 4 & 266,000 \\\hline 5 & 150,000 \\\hline\end{array}$$ Considering the residual value is zero,calculate the payback period.(Round your answer to two decimal places.)

• A) 4.61 years
• B) 3.21 years
• C) 3.42 years
• D) 3.70 years

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