Rent-To-Own Equipment Co

Multiple Choice

Rent-to-Own Equipment Co.is considering a new inventory system that will cost $750,000.The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one,$325,000 in year two,$150,000 in year three,and $180,000 in year four.Rent-to-Own's required rate of return is 8%.What is the payback period of this project?

A) 4.00 years
B) 3.09 years
C) 2.91 years
D) 2.50 years