A company purchased a new machine on January 1 of this year for P45,000, with an estimated useful life pf 5 years and a salvage value of P5,000. The machine will be depreciated using the straight-line method. The machine is expected to produce cash flow from operations, net of income taxes, of P18,000 a year in each of the next five years. The new machine's salvage value is P10,000 in years 1 and 2, and P7,500 in years 3 and 4.

Compute the bail-out period for this new machine.