A company is considering the purchase of new equipment costing $$30,000.$ The projected annual after$-$tax net income from the equipment is $$1,200,$ after deducting $$7,500$ for depreciation. The revenue is to be received at the end of each year. The machine has a useful life of four years and no salvage value. The company requires a $12\%$ return on its investments.

Use PV tables to calculate the break$-$even time for this equipment. Based on these computations,

Break$-$even time is between three and four years.

Break$-$even time is between one and two years.

Break$-$even time is longer than four years.

Break$-$even time is between two and three years.