Pillows Incorporated was considering an investment in the following project:

Required initial investment	$ 850,000
Net annual after-tax cash inflow	$ 169,000
Annual depreciation expense (($850,000 $156,000)/20 years)	$ 34,700
Estimated salvage value	$ 156,000
Life of the project in years	20

Assume that cash inflows occur evenly throughout the year. The estimated payback period in years (rounded to one decimal place) for the proposed project is:

Multiple Choice

2.7 years.

3.6 years.

4.8 years.

5.0 years.

6.9 years.