In: Accounting
A company is considering purchasing factory equipment that costs $320,000 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 $90,000 and annual operating expenses exclusive of depreciation expense are expected to be $40,000. The straight-line method of depreciation would be used.
The cash payback period on the equipment is
Select one:
A. 3.6 years.
B. 8.0 years.
C. 3.2 years.
D. 6.4 years.
E. None of the above.