# Problem

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?

a. 2 Years.

b. 4 Years.

c. 6 Years.

d. 8 Years.

e. 10 Years.

https://brainmass.com/business/finance/problem-31183

$2.49