Kent Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $554,000, a 7-year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:

Year 1	$	117,000
Year 2	$	109,000
Year 3	$	107,000
Year 4	$	96,000
Year 5	$	93,000
Year 6	$	88,000
Year 7	$	82,000

What is the payback period?

Multiple Choice

• 5.36 years

• 4.90 years

• 5.57 years

• 5.39 years