A Company Is Considering Purchasing Factory Equipment That Costs $320000

Multiple Choice

A company is considering purchasing factory equipment that costs $320000 and is estimated to have no salvage value at the end of its 8-year useful life. If the equipment is purchased annual revenues are expected to be $90000 and annual operating expenses exclusive of depreciation expense are expected to be $40000. The straight-line method of depreciation would be used. The cash payback period on the equipment is

A) 3.6 years.
B) 8.0 years.
C) 3.2 years.
D) 6.4 years.