Peng Corporation Is Considering the Purchase of New Equipment Costing

Peng Corporation is considering the purchase of new equipment costing $30,000.The projected annual after-tax net income from the equipment is $1,200,after deducting $10,000 for depreciation.The revenue is to be received at the end of each year.The machine has a useful life of four years and no salvage value.Peng requires a 12% return on its investments.The factors for the present value of $1 for different periods follow:
$$\begin{array} { l r } \underline{\text { Periods }} & \underline{12 \text { Percent }} \\1 & 0.8929 \\2 & 0.7972 \\3 & 0.7118 \\4 & 0.6355\end{array}$$
Calculate the break-even time for this equipment.

A) Break-even time is longer than four years.
B) Break-even time is between three and four years.
C) Break-even time is between two and three years.
D) Break-even time is between one and two years.
E) This project will never break even.