Equipment a Costing $80 000 Is Expected to Generate $12

Multiple Choice

Equipment A costing $80 000 is expected to generate $12 000 annually in cash inflows during its life of 8 years. Equipment B costing $120 000 is expected to generate $17 000 annually in cash inflows during its life of 8 years. Equipment C costing $60 000 is expected to generate $8000 annually in cash inflows during its life of 9 years. Rank the three investments in terms of payback period.

A) A1, B2, C3.
B) B1, A2, C3
C) A1, B2, C3
D) C1, A2, B3