#3

1. Payback, Accounting Rate of Return, Net Present Value, Internal Rate of Return

   Blaylock Company wants to buy a numerically controlled (NC) machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $900,000. The NC equipment will last five years with no expected salvage value. The expected after-tax cash flows associated with the project follow:

   Year	Cash Revenues	Cash Expenses
   1	$1,200,000	$1,000,000
   2	1,200,000	1,000,000
   3	1,200,000	1,000,000
   4	1,200,000	1,000,000
   5	1,200,000	1,000,000

   Required:

   Compute the payback period for the NC equipment. Round your answer to one decimal place. Payback period = fill in the blank 1 years