A machine can be purchased for $150,000 and used for five years, yielding the following net incomes. In projecting net incomes, straight-line depreciation is applied, using a five-year life and a zero salvage value.

	Year 1				Year 2				Year 3				Year 4				Year 5
Net income		$	10,000			$	25,000			$	50,000			$	37,500			$	100,000

Compute the machines payback period (ignore taxes). (Round payback period to 3 decimal places.)

Compute the machine's payback period (ignore taxes). (Round payback period to 3 decimal places.) Year Net Income DepreciationNet Cash Flow Cumulative Cash Flow (150,000) (110,000) (55,000) 25,000 92,500 222,500 (150,000)S 10,000 $ 25,000 50,000 37,500 100,000 30,000$ 30,000 30,000 30,000 30,000 40,000$ 55,000 80,000 67,500 4 5 130,000 Payback period