The Cost of a New Machine Is $250,000

Multiple Choice

The cost of a new machine is $250,000. The machine has a five-year life and no salvage value. If the cash flow each year is equal to 25 percent of the cost of the machine, calculate the payback period for the project.

A) 2.0 years
B) 2.5 years
C) 3.0 years
D) 4.0 years