Quezon Company is evaluating two possible investments in depreciable plant assets. The company

uses the straight-line method of depreciation. The following information is available:

Investment A Investment B

Initial capital investment Php 56,250 Php 80,000

Estimated useful life 5 years 5 years

Estimated residual value Php 5,000 Php 7,500

Estimated annual net cash inflow

For 3 years Php 12,250 Php 20,000

Required rate of return 10% 12%

What is the payback period for Investment B?

Select one:

a. 1.82 years

b. 2.00 years

c. 5.34 years

d. 1.18 year