Heston Farming Company would like to purchase a harvesting machine for $100,000. The machine is expected to have a life of 4 years, and a salvage value of $20,000. Annual maintenance costs will total $28,000. Annual savings are predicted to be $60,000 (this is the same data as the previous exercise). Determine the payback period for this investment using the format shown in Table 8.1 " Calculating the Payback Period for Jacksons Quality Copies"

Table 8.1 Calculating the Payback Period for Jacksons Quality Copies

	Investment (Cash Outflow)	Cash Inflow	Unrecovered Investment Balance
Year 0	$(50,000)	-	$(50,000)a
Year 1	-	$10,000	(40,000)b
Year 2	-	10,000	(30,000)c
Year 3	-	10,000	(20,000)
Year 4	-	10,000	(10,000)
Year 5	-	10,000	0
Year 6	-	10,000	0
Year 7	-	15,000	0
a $(50,000) = $(50,000) initial investment. b $(40,000) = $(50,000) unrecovered investment balance + $10,000 year 1 cash inflow. c $(30,000) = $(40,000) unrecovered investment balance at end of year 1 + $10,000 year 2 cash inflow.