A company is considering purchasing factory equipment that costs $320,000 and is estimated to have no...

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.

Expert Solution

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