Paramount Company Is Considering Purchasing New Equipment Costing $700,000 Residual Value Is Zero

Paramount Company is considering purchasing new equipment costing $700,000. The company's management has estimated that the equipment will generate cash flows as follows: $$\begin{array} { | c | r | } \hline \text { Year 1 } & \$ 200,000 \\\hline 2 & 200,000 \\\hline 3 & 250,000 \\\hline 4 & 250,000 \\\hline 5 & 150,000 \\\hline\end{array}$$ Residual value is zero. What is the payback period?

A) 4.5 years
B) 3.2 years
C) 3.5 years
D) 3.8 years