Michigan Mattress Company is considering the purchase of land and the
construction of a new plant. The land, which would be bought
immediately
(at t = 0), has a cost of $100,000 and the building, which would be
erected at the end of the first year (t = 1), would cost $500,000. It
is estimated that the firm’s after-tax cash flow will be increased by
$100,000 starting at the end of the second year, and that this
incremental flow would increase at a 10 percent rate annually over the
next 10 years. What is the approximate payback period?





0 	0% 	A . 	2 Years.
0 	0% 	B . 	4 Years.
0 	0% 	C . 	6 Years.
0 	0% 	D . 	8 Years.
0 	0% 	E . 	10 Years.