(Ignore income taxes in this problem.) The Halsey Corporation is contemplating the purchase of new equipment that would require an initial investment of $125,000. The equipment would have a useful life of six years, with a salvage value of $29,000. This new equipment would be depreciated over its useful life by the straight-line method. It would replace existing equipment which is fully depreciated. The existing equipment has a salvage value now of $38,000. The anticipated annual revenues and expenses associated with the new equipment are:

Revenue (all cash) $95000

Operating Expenses:

wages(all cash): $41000

Depreciation: $16000

Other (all cash): $16000

Assume cash flows occur uniformly throughout a year except for the initial investment and the salvage value at the end of the project.

The payback period is closest to: A. 5.7 years B. 4.0 years C. 2.3 years D. 1.8 years

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