Nestor Company is considering the purchase of an asset for $100,000. It is expected to produce the following net cash flows. The cash flows occur evenly throughout each year. Compute the break-even time (BET) period for this investment. Annual NetCash FlowsPresent Valueof $1 at 10%Year 0 1.0000 Year 1$40,000 0.9091 Year 2$40,000 0.8264 Year 3$35,000 0.7513 Year 4$35,000 0.6830 Year 5$30,000 0.6209
A. 3.62 years.
B. 2.98 years.
C. 2.85 years.
D. 3.17 years.
E. 2.57 years.
Answer: D
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