Problem:
Hazard Company is considering the acquisition of a machine that costs $375,000. The machine is expected to have a useful life of 6 years, a negligible residual value, an annual cash flow of $150,000, and annual operating income of $87,500.
Required:
Question: What is the estimated cash payback period for the machine?
Select one:
a. 3 years
b. 4.3 years
c. 2.5 years
d. 5 years
Note: Please show the work not just the answer.