Foster Creations

Foster Creations is considering an investment in a computer that is capable of producing various images that are useful in the production of commercial art. The computer would cost $$20,000$ and have an expected life of eight years. The computer is expected to generate additional annual net cash receipts $($before$-$tax$)$ of $$6,000$ per year. The computer will be depreciated according to the straight$-$line method and the firm's marginal tax rate is $25$ percent.

Refer to Foster Creations. What is the after$-$tax payback period for the computer project?

Select one:

a$.4\mathrm{.}44$ years

b$.3\mathrm{.}11$ years

c$.7\mathrm{.}62$ years

d$.3\mathrm{.}90$ years