andezande Inc. is considering the acquisition of a new machine that costs $358,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.):

Incremental Net Operating Income Incremental Net Cash Flows

Year 1 $65,000 $147,000

Year 2 $71,000 $150,000

Year 3 $82,000 $181,000

Year 4 $45,000 $147,000

Year 5 $87,000 $149,000

Assume cash flows occur uniformly throughout a year except for the initial investment.

The payback period of this investment is closest to

Multiple Choice

• 3.3 years
• 5.0 years
• 4.7 years
• 2.3 years