153.Award: 2.00 points154.Award: 2.00 pointsFloyd Clymer is the CFO of Bonavista Mustang, a manufacturer of parts for classic automobiles.Floyd is considering the purchase of a two-ton press which will allow the firm to stamp out autofenders. The equipment costs $250,000. The project is expected to produce after-tax cash ﬂows of$60,000 the first year, and increase by $10,000 annually; the after-tax cash ﬂow in year 5 will reach$100,000. Liquidation of the equipment will net the firm $10,000 in cash at the end of five years,making the total cash ﬂow in year five $110,000.What is the payback period for the proposed investment?2.0 years2.4 years3.0 years3.4 yearsThe investment doesn't pay backReferencesMultiple ChoiceDiﬃculty: ModerateLearning Objective: 09-02 The paybackrule and some of its shortcomings.A project has an initial cost of $72,500. The cash inﬂows are $11,500, $36,900, $22,900, and$18,200 over the next four years, respectively. What is the payback period?