2) (25 points) Andes, Inc. is considering the purchase of robots for its fulfillment centers at a cost of $6 million. The use of robots is expected to generate annual savings in labor costs as shown below. MARR is 10% per year compounded annually.

End of Year 1 2 3 4 5 6 Annual savings respectfuly. $1.5 million $1.5 million $1.5 million $1.75 million $1.75 million $1.5 million

a) (10 points) Compute the payback period for this new venture.

b) (15 points) Determine the discounted payback period (DPBP). It is enough if you determine in which year the DPBP falls.