A machine can be purchased for $257,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining 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		$	17,000			$	34,000			$	53,000			$	42,500			$	111,000

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

Computation of Annual Depreciation Expense
Year	Beginning Book Value	Annual Depr. (40% of Book Value)	Accumulated Depreciation at Year-End	Ending Book Value
1	257,000	102,800
2
3
4
5
Annual Cash Flows
Year	Net income	Depreciation	Net Cash Flow	Cumulative Cash Flow
0	$(257,000)			$(257,000)
1	17,000	102,800
2	34,000
3	53,000		53,000	53,000
4	42,500		42,500	95,500
5	111,000		111,000	206,500
Payback period =					years