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Apex Corp Is Planning to Buy a Production Machine Costing $100,000\$ 100,000

Question 83

Multiple Choice

Apex Corp. is planning to buy a production machine costing $100,000\$ 100,000 . This machine's expected useful life is five years, with no residual value. Apex uses a discount rate of 10%10 \% and has calculated the following data pertaining to the purchase and operation of this machine:
 Year  Estimated Annual Net Cash Inflow 1$60,0002$30,0003$20,0004$20,000\begin{array}{|r|r|}\hline \text { Year } & \text { Estimated Annual Net Cash Inflow } \\\hline 1 & \$ 60,000 \\\hline 2 & \$ 30,000 \\\hline 3 & \$ 20,000 \\\hline 4 & \$ 20,000 \\\hline\end{array}
5$20,000 (Ignore income taxes in this problem.)  \begin{array}{l}\begin{array} { | l | r | } \hline 5 & \$ 20,000 \\\hline\end{array}\\\text { (Ignore income taxes in this problem.) }\end{array}
-What is the payback period for this investment?


A) 2.50 years.
B) 2.75 years.
C) 3.00 years.
D) 5.00 years.

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