Eagle Company Is Considering the Purchase of an Asset for $100,000.It

question 36

Multiple Choice

Eagle Company is considering the purchase of an asset for $100,000.It is expected to produce the following net cash flows.The cash flows occur evenly throughout each year.Compute the payback period for this investment.(Round to two decimal places.) $$\begin{array} { | l | r | l | } \hline & \begin{array} { l } \text { Annual Net } \\\text { Cash Flows }\end{array} \\\hline \text { Year 1 } & \$ 40,000 & \\\hline \text { Year 2 } & \$ 40,000 & \\\hline \text { Year 3 } & \$ 35,000 & \\\hline \text { Year 4 } & \$ 35,000 & \\\hline \text { Year 5 } & \$ 30,000 & \\\hline\end{array}$$

• A)2.85 years.
• B)2.57 years.
• C)3.00 years.
• D)2.50 years.
• E)3.62 years.

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