Pearl Manufacturing Company Provides Glassware Machines for Major Department Store

Multiple Choice

Pearl Manufacturing Company provides glassware machines for major department store retailers. The company has been investigating a new piece of machinery for its production department. The old equipment has a remaining life of six years and the new equipment has a value of $319,400 with a six-year life. The expected additional cash inflows are $113,000 per year. What is the payback period for this investment?

A) 1.8 years
B) 3.8 years
C) 2.8 years
D) 6 years