Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $110,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $30,000 per year, but would also require her to pay $16,000 for a regulatory audit every other year (starting from the first year).

a. What is the payback period on this investment? (years and month)

b. Does this investment satisfy Clara's payback rule?