Assume that Gary Knitting Associates buy a new forklift for $40,000.00. It is expected that the forklift will last for five (5) years and then spontaneously combust (at night, when nobody gets hurt) and have no residual value at the end of the five years. During its life, the forklift will provide annual savings in handling costs of $15,000.00. What is the Pay-Off-Period for this investment?

Select one:

a. 5 years.

b. 2.67 years.

c. It will never pay off, because the annual savings are less than the cost of the forklift.

d. 0.375 years.

e. 2 years.