A Company Is Evaluating Three Possible Investments What Is the Payback Period for Project A? (Assume That

Multiple Choice

A company is evaluating three possible investments.The following information is provided by the company.
$\begin{array}{|l|l|l|l|} \hline & \text { Project A } & \text { Project B } & \text { Project C } \\\hline \text { Investment } & \$ 214,000 & \$ 54,000 & \$ 214,000 \\\hline \text { Salvage value } &0 & 22,000 & 24,000 \\\hline \text { Net cash flows: } & & & \\\hline \text { Year } 1 & 58,000 & 26,000 & 84,000 \\\hline \text { Year } 2 & 58,000 & 17,000 & 54,000 \\\hline \text { Year } 3 & 58,000 & 13,000 & 64,000 \\\hline \text { Year } 4 & 58,000 & 10,000 & 24,000 \\\hline \text { Year } 5 & 58,000 & 0& 0 \\\hline\end{array}$
What is the payback period for Project A? (Assume that the company uses the straight-line depreciation method.)

A) 2.7 years
B) 5.0 years
C) 3.7 years
D) 2.1 years