A college friend of mine just filed for a patent for a new product the bowling buddy bowlers training aid (Google it after the exam). The bowling buddy sells for $55 and the variable cost per unit is $26. They rent production space for $25,000 annually. The initial investment is $250,000 and the project life is 5 years. Assume appropriate discount rate is 10% and ignore taxes. Assuming my friend can sell 3,000 bowling buddies per year, what is the discounted payback period of the project?

Select one:

a.

3 years

b.

4 years

c.

5 years

d.

The project does not pay for itself on a discounted basis.

e.

None of the above.