Hello, I am pretty confused on how to calculate the payback method. Could someone please help me figure this out? Thank you! Disclaimer: this example is taken from a non graded practice assignment.

Stratford Inc. is considering a $1,000,000 long term investment proposal with the following cash flows:

Year Cash Flow

1 $170,000

2 505,000

3 225,000

4 250,000

5 150,000

6 100,000

Possible answers:

4 years, 5 months

3 years

3 years, 5 months

2 years, 5 months