$$\text { Reference: } 10 - 05$$ The Sawyer Company Has $80,000 to Invest and Is Considering

$$\text { Reference: } 10 - 05$$ The Sawyer Company has $80,000 to invest and is considering two different projects, X and Y. The following data are available on the projects: $$\begin{array} { | l | l | l | } \hline & \text { Project } X & \text { Project } Y \\\hline \text { Cost of equipment needed now } & \$ 80,000 & - \\\hline \text { Working capital requirement } & - & \$ 80,000 \\\hline \text { Annual cash operating inflows } & \$ 23,000 & \$ 18,000 \\\hline \text { Salvage value in 5 years } & \$ 6,000 & - \\\hline\end{array}$$ Both projects will have a useful life of 5 years; at the end of 5 years, the working capital will be released for use elsewhere. Sawyer's discount rate is 12%.
-A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. The payback period for this machine in years is closest to:

A) 40 years.
B) 10.7 years.
C) 0.27 years.
D) 3.75 years.