Bill Plans to Open a Do-It-Yourself Dog Bathing Center in a Storefront

Multiple Choice

Bill plans to open a do-it-yourself dog bathing center in a storefront. The bathing equipment will cost $160,000. Bill expects the after-tax cash inflows to be $40,000 annually for seven years, after which he plans to scrap the equipment and retire to the beaches of Jamaica.

What is the project's payback period?

A) 1.5 years
B) 2.0 years
C) 3.3 years
D) 4.0 years
E) 4.3 years