The Fig Tree is considering purchasing some new equipment at a cost of $146,000. The equipment has a 3-year life and is expected to produce cash inflows of $42,000 in year 1, $ 94,000 in year 2, $118,000 in year 3. The equipment will be depreciated using straigh-line depreciation to a zero book value over the life of the project. What is the payback period?
a. 1.78 years
b. 1.86 years
c. 2.01 years
d. 2.08 years