Carol Rollins, owner or Carollins, is considering buying an energy-efficient oven for her restaurant. However, she is concerned that the cost savings adequately offset the purchase price; she would prefer the project to have no more than a 2.5 year payback period. She is basing her decision on the following information.

Project Cost: $23,500

Cost Savings:

Years

1 2 3 4 5

Energy $2,000 $2,500 $3,000 $3,000 $3,000

Maint. $3,000 $3,000 $3,000 $1,000 $1,000

Total $5,000 $5,500 $5,000 $4,000 $4,000

Required:

1. Determine of Ms. Rollins should invest in this oven

2. If there were an estimated cash savings of $4,500 for each year, would this oven be purchased based on the payback criterion?