Assume the following information for a capital budgeting proposal with a five$-$year time horizon:

Initial investment:

Cost of equipment $($zero salvage value$)$ $ $500,000$

Annual revenues and costs:

Sales revenues $ $300,000$

Variable expenses $ $130,000$

Depreciation expense $ $50,000$

Fixed out$-$of$-$pocket costs $ $40,000$

The payback period for this investment is closest to:

Multiple Choice

$2\mathrm{.}94$ years.

$6\mathrm{.}25$ years.

$3\mathrm{.}85$ years.

$1\mathrm{.}52$ years.