Use the Following Information for Questions

question 47

Multiple Choice

Use the following information for questions
A company is considering purchasing factory equipment that costs $480,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased, annual revenues are expected to be $135,000 and annual operating expenses exclusive of depreciation expense are expected to be $39,000. The straight-line method of depreciation would be used.
-The cash payback period on the equipment is

• A) 13.3 years.
• B) 8.0 years.
• C) 5.0 years.
• D) 2.5 years.

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