37. Payback Period Calculation. Heston Farming Company would like to purchase a harvesting machine for $100,000. The machine is expected to have a life of 4 years and a salvage value of $20,000. Annual maintenance costs will total $28,000. Annual savings are predicted to be $60,000 (these are the same data as the previous exercise). Determine the payback period for this investment using the format shown in Table 8.6. Table 8.6 Calculating the Payback Period for Jackson's Quality Copies Investment (Cash Outflow) Unrecovered Investment Balance Cash Inflow Year o $ (50,000) $ $ (50,000) Year 1 10,000 (40,000) Year 2 10,000 (30,000) Year 3 10,000 (20,000) Year 4 10,000 (10,000) Year 5 10,000 0 Year 6 10,000 0 Year 7 15,000 0 a $(50,000) = $(50,000) initial investment. 6 $(40,000) = $(50,000) unrecovered investment balance + $10,000 year 1 cash inflow. c S(30,000) = $(40,000) unrecovered investment balance at end of year 1 + $10,000 year 2 cash inflow. Incorrect 37. Payback Period Calculation Based on the chart below, the payback period is Net Investment Cash (Cash Outflow) Inflow Year 0 Year 1 $32,000 Year 2 Year 3 Year 4 years (rounded to the nearest year). Unrecovered Investment Balance Incorrect (568,000) Correct Incorrect Incorrect