t assessment

$0$:$06$:$47$ elapsed

Nolan Ltd$.$ is considering upgrading its office equipment. The cost of this upgrade will be $$520,000,$ and the upgrade will qualify for the $20\%$ CCA rate. The equipment qualifies for the Accelerated Investment Incentive phase$-$out. With this upgrade, the company expects to realize before$-$tax savings in personnel and other costs as follows: Year $1-$ $$130,000$; Year $2-$ $$230,000$; Year $3-$ $$210,000$; Year $4$ $$50,000.$ There is no salvage value for this investment. The company's income tax rate is $22\%$ and its cost of capital is $10\%.$ What is the payback period for this investment proposal?

a$)1\mathrm{.}5$ years

b$)2\mathrm{.}2$ years

c$)2\mathrm{.}5$ years

d$)3\mathrm{.}4$ years