Cash Payback Period for a Service Company

Chinook Industries Inc. is evaluating two capital investment proposals for a retail outlet, each requiring an investment of $900,000 and each with an eight-year life and expected total net cash flows of $1,000,000. Location 1 is expected to provide equal annual net cash flows of $200,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1	$300,000		Year 5	$50,000
Year 2	220,000		Year 6	50,000
Year 3	180,000		Year 7	30,000
Year 4	150,000		Year 8	20,000

Determine the cash payback period for both location proposals.

Location 1
Location 2