A Company Wishes to Buy New Equipment for $9,000

A company wishes to buy new equipment for $9,000. The equipment is expected to generate an additional $2,800 in cash inflows for six years. All cash flows occur at year-end. A bank will make a $9,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment: Present Value
Year of 1 at 10%
0 1.0000
1 0.9091
2 0.8265
3 0.7513
4 0.6830
5 0.6209
6 0.5645

A) Break-even time is between two and three years.
B) Break-even time is between three and four years.
C) Break-even time is between four and five years.
D) Break-even time is between five and six years.
E) This project will never break-even.