A company is considering the purchase of a new piece of equipment for $90,000.Predicted annual cash inflows from this investment are $36,000 (year 1) ,$30,000 (year 2) ,$18,000 (year 3) ,$12,000 (year 4) and $6,000 (year 5) .The payback period is:

A) 4.50 years.
B) 4.25 years.
C) 3.50 years.
D) 3.00 years.
E) 2.50 years.

To find the payback period, we need to calculate the time it takes for the company to recover the initial investment of $90,000.

Year 1 cash inflow = $36,000
Amount left to recover = $54,000 ($90,000 - $36,000)

Year 2 cash inflow = $30,000
Amount left to recover = $24,000 ($54,000 - $30,000)

Year 3 cash inflow = $18,000
Amount left to recover = $6,000 ($24,000 - $18,000)

Year 4 cash inflow = $12,000
Amount left to recover = $0 ($6,000 - $12,000)

Therefore, the payback period is 3 years and 9 months, or 3.5 years.

The best choice is C, as it has the shortest payback period among the options given.