Green Way Packaging Is Considering a $600,000 Investment in New

question 42

Multiple Choice

Green Way Packaging is considering a $600,000 investment in new equipment that is anticipated to produce the following data over a five-year life: $\begin{array}{rrrr}\text { Year}&\text { Cash Inflows }&\text { Cash Outflows } & \text { Depreciation }\\\hline1 & \$ 350,000 & \$ 130,000 & \$ 120,000 \\2 & 450,000 & 190,000 & 120,000 \\3 & 450,000 & 170,000 & 120,000 \\4 & 340,000 & 150,000 & 120,000 \\5 & 300,000 & 130,000 & 120,000\end{array}$ Ignoring income taxes and assuming that cash flows occur evenly throughout a year, the equipment's approximate payback period is:

• A) 1 year, 7 months.
• B) 2 years, 1 month.
• C) 2 years, 5 months.
• D) over 5 years.
• E) some other period of time not noted in the options.