Question: Gates Supply is considering purchasing some new equipment at a cost of $163,000. The equipment has a 3-year life and is expected to produce cash

Gates Supply is considering purchasing some new equipment at a cost of $163,000. The equipment has a 3-year life and is expected to produce cash inflows of $46,000 in year 1, $87,000 in year 2, and $123,000 in year 3. The equipment will be depreciated using straight-line depreciation to a zero book value over the life of the project. What is the payback period?

a. 2.06 years

b. 2.24 years

c. 2.67 years

d. 3.11 years

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