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Florian Co. is considering purchasing a new piece of equipment that will cost $600,000. The equipment has an estimated useful life of 8 years and

Florian Co. is considering purchasing a new piece of equipment that will cost $600,000. The equipment has an estimated useful life of 8 years and no salvage value. The equipment will produce cash inflows of $215,000 per year and net income of $90,000 per year. Florian requires a 10% rate of return.

What is the payback period for this equipment?

Select one:

a. 8.0 years

b. 3.75 years

c. 2.79 years

d. 6.67 years

e. None of the above

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