$$\text { Reference: } 10 - 03$$ Apex Corp Is Planning to Buy Production Machinery Costing $100,000

question 71

Multiple Choice

$$\text { Reference: } 10 - 03$$ Apex Corp. is planning to buy production machinery costing $100,000. This machinery's expected useful life is five years, with no residual value. Apex uses a discount rate of 10% and has calculated the following data pertaining to the purchase and operation of this machinery: $$\begin{array} { | c | c | } \hline \text { Year } & { \begin{array} { c } \text { Estimated } \\\text { annual net } \\\text { cash inflow }\end{array} } \\\hline 1 & \$ 60,000 \\\hline 2 & 30,000 \\\hline 3 & 20,000 \\\hline 4 & 20,000 \\\hline 5 & 20,000 \\\hline\end{array}$$
-The payback period is?

• A)2.50 years.
• B)3.00 years.
• C)2.75 years.
• D)5.00 years.

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