A Flexible Manufacturing System Is Expected to Cost $25,000,000 but Has

Multiple Choice

A flexible manufacturing system is expected to cost $25,000,000 but has present values of after-tax cash flow as shown in the table.The interest rate used is 10 percent.What is the payback of this investment?
$$\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Present } \\\text { Value }\end{array} & \begin{array} { c } \text { Net Present } \\\text { Value }\end{array} \\\hline 1 & \$ 11,000,000 & \$ 10,000,100 \\\hline 2 & \$ 9,000,000 & \$ 7,437,600 \\\hline 3 & \$ 7,000,000 & \$ 5,259,800 \\\hline 4 & \$ 5,000,000 & \$ 3,415,000 \\\hline 5 & \$ 3,000,000 & \$ 1,862,700 \\\hline\end{array}$$

A) Less than two years
B) Between two and three years
C) Between three and four years
D) More than four years