2 points Save Answ Kentucky Hardware Company (KHC) is considering an investmert project that requires a new machine for producing special tools. This new machine costs $800,000 and will be depreciated over five years on a straight-line basis toward zero salvage value. KHC paid a consulting compamy $50,000 last yea to help them decide whether there is sufficient demand for the special tools. In addition to the investment on the machine, KHC invests $30.000 in ret working capital, ioHC also has estimated the performance of the new machine and believes that the new machine will produce $450,000 per year in sales, $200,000 per year in cost of goods sold, and $30.000 per year in administrative expenses. The company pays $45,000 in interest expenses annually and has average tax rate 35 %. In order to get an estimate of cost of capital, KHC collect the following information. 10,000 6.4 % coupon bonds outstanding $1,000 par value, 25 years to maturity, selling for 110.69 % of par, the bonds make semiannual p Debt nts 496,000 shares outstanding, selling for $63 per share; the beta is 1.06 KHC's most recent dividend was $2.73 per share, and dividends are expected to grow at an annual rate of 5 % indefinitely Common stock Preferred stock 35,000 shares outstanding, seling for $72 per share; the prefered stock dividend is $3.5 per share 8.8% market risk premium and 0.75 % rsk-free rate. Market What is the payback period for the investment project? Oa 4.58 years Ob.4.15 years Oc.6.01 years Od.3.82 years