Patterson Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $500,000, a 7-year life, and $150,000 salvage value. The increase in net income each year of the equipment's life would be as follows: Year 1$99,000Year 2$91,000Year 3$89,000Year 4$78,000Year 5$75,000Year 6$70,000Year 7$64,000?What is the payback period?
A. 3.55 years
B. 6.18 years
C. 5.97 years
D. 3.82 years
Answer: A
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