Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $250,000 and have a useful life of four years. The system yields an incremental after-tax income of $72,115 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $10,000. b. A machine costs $200,000, has a $13,000 salvage value, is expected to last eight years, and will generate an after-tax income of $39,000 per year after straight-line depreciation. Answer is complete but not entirely correct. Payback Period Choose Numerator: Payback Period Choose Denominator: Annual net cash flow Cost of investment 1 = Payback period a. $ 1 $ 2.23 years 250,000 200,000 112,115 X 56,000 b. $ 1 $ = 3.57 years