A potential project involves an initial investment in machinery of RO.1,000,000 and has these operating annual cash inflows:

Year 1 RO.400,000

Year 2 RO.500,000

Year 3 RO.650,000

Year 4 RO.300,000

Year 5 RO.450,000

The machine will give rise to extra operational expenses of RO.20,000 per year. The machinery will be sold for scrap at the end of year 5 for RO.50,000. The corporation tax rate is 30% (tax is payable in the same year as it arises). The cost of capital of the company is 10% (Discount rate)

What is the discounted payback period of the project?

Note (Ignore depreciation calculation)

a.

3 Years and 3 Months

b.

4 Years and 1 Months

c.

4 Years and 8 Months

d.

None of the options