Jarvey Company is studying a project that would have a ten-year life and would require a $450,000 investment in equipment which will have no salvage value. The project would provide annual net operating income as follows:

Sales		$500,000
Less Cash Variable Expenses		200,000
Contribution Margin		$300,000
Less Fixed Expenses:
Fixed Cash Expenses	$150,000
Depreciation Expense	45,000	195,000
Net Operating Income		$105,000

The companys required rate of return is 12%. Ignoring income taxes, what is the payback period for this project?

3 years?

2 years?

4.28 years?

9 years?

Step by step answer please