Dwayne "The Rock" Johnson's manager is worried about his safety and would like The Rock to invest in safety precautions for when he's working out at the Iron Palace. Mr. Johnson is looking at two proposals. The first would be to retrofit his home gym with safety pads so that any accidents with weights or chains will not "damage the product" (i.e., his face). The second would be to build a medical clinic on site so that any injuries could be treated immediately, ideally before they end up on social media. Dwayne Johnson only wishes to invest in one of the two options. His hurdle rate for any investment is 12%. Information for both projects is as follows: Dwayne "The Rock" Johnson's Investment Options Financial Information Gym Retrofit Investment 80,000 Useful Life 10 years Salvage Value 0 Estimated Annual Cash Flow 15,940 Estimated Annual Net Income 12,000 What is the payback period on the Medical Clinic? 5.37 years 10 years 6.82 years 8 years Medical Clinic 120,000 15 years 45,000 17,600 15,000