A company is considering the purchase of a new piece of equipment that costs $51,900 and will have a salvage value of $5,190 after 9 years. Using the new piece of equipment will increase annual cash flows by $6,190.

Required: What is the payback period for the new piece of equipment? Suppose that the increase in cash flows was $10,190 in the first year, then decreased by $1,000 each year over the life of the equipment.

What is the payback period for the new piece of equipment? _____ years

Suppose that the increase in cash flows was $10,190 in the first year, then decreased by $1,000 each year over the life of the equipment. What is the payback period for the equipment? _____ years