Determine break-even time for this equipment

Question

A company wishes to buy new equipment for $35,000. The equipment is expected to generate an additional $9,600 in cash inflows for seven years. All cash flows occur at year-end. A bank will make a $35,000 loan to the company at a 10% interest rate so that the company can purchase the equipment. Use the table below to determine break-even time for this equipment.
Year Present Value of 1 at 10%

• 0 1.0000
• 1 0.9091
• 2 0.8264
• 3 0.7513
• 4 0.6830
• 5 0.6209
• 6 0.5645
• 7 0.5132

1. Break-even time is between 3 and 4 years.
2. Break-even time is between 4 and 5 years.
3. Break-even time is between 5 and 6 years.
4. Break-even time is between 6 and 7 years.
5. This project will never break-even.