You are reviewing a capital budget proposal. If your business purchases a delivery vehicle for $27,500, it will save the following after-tax cash flows: $11,000 for year 1, $8,500 for year 2, $5,500 for year 3, and $5,000 for year 4. What is the payback period for the proposal?
a) 3.5 years
b) 2.8 years
c) 3.1 years
d) 2.9 years
e) 3.6 years
