Compute the payback period for each of these two separate investments:

a.

A new operating system for an existing machine is expected to cost $290,000 and have a useful life of four years. The system yields an incremental after-tax income of $83,653 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

Payback period

years

b.	A machine costs $180,000, has a $15,000 salvage value, is expected to last eight years, and will generate an after-tax income of $46,000 per year after straight-line depreciation. (Round your intermediate calculations to the nearest dollar amount and final answer to 2 decimal places.)

Payback period

years

2.

A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Management predicts this machine has a 10-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute this machine