Problem:
The Seattle Corporation has been presented with an investment opportunity which will yield cash flows of $30,000 per year in Years l through 4; $35,000 per year in Years 5 through 9; and $40,000 in Year l0. This investment will cost the firm $150,000 today, and the firm's cost of capital is 10 percent. Assume cash flows occur evenly during the year.
Required:
Question: What is the payback period for this investment (one decimal point)?
Note: Please provide through step by step calculations.