4 ABC Company purchased equipment having a cost of $150,000. It is expected that the equipment will generate annual net cash inflows of $40,000 per year and the equipment has an expected life of six years. ABC Company employs a cost of capital of 14% on all capital projects. The payback period on the machine is closest to: 8 years O 2.17 years 3.75 years 1.24 years 1.32 years