Siegmeyer Corp. is considering a new inventory system, Project A That will cost $800,000. The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year two, $400,000 in year three, and $200,000 in year four. Sigmeyers required rate of return is 12%. What is the payback period?

Answer

4years

3.13 yars

2.50 year

Or 2.32 years?