Detailed Answer
Answer (C) is correct. The discounted payback period is the number of years needed to get the PV of the cash flows to equal the initial investment. At a 14% discount rate, this occurs at 9.2 years. The inflows during the first 9 years are $3,956,800 ($800,000 × 4.946). The remaining amount from the initial investment that must be recovered in the tenth year is $43,200 ($4,000,000 – $3,956,800). This amount is one-fifth of the tenth year’s discounted inflow [$43200 ÷ ($800,000 × .270). Thus the discounted payback period is 9.2.