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Question
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. (Round to two decimal places.)| Annual Net Cash Flows |
Present Value of 1 at 10% | |
| Year 0 | 1.0000 | |
| Year 1 | $40,000 | .9091 |
| Year 2 | $40,000 | .8264 |
| Year 3 | $35,000 | .7513 |
| Year 4 | $35,000 | .6830 |
| Year 5 | $30,000 | .6209 |
A.2.85 years.
B.2.57 years.
C.3.17 years.
D.2.98 years.
E.3.62 years.
Answer
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