Lila Limited is considering the purchase of a new machine for its manufacturing facilities. The purchase of the machine is expected to reduce operating costs.

Presented below is the relevant cost and operating information relating to the new machine:

Initial Cost

$217779

Installation Costs

$20038

Useful Life

11 years

Expected annual cash operating savings - years 1-11

$56672

Additional annual cash fixed costs

$13677

Assuming Lila Limited uses the payback method to evaluate capital expenditures, what is the payback period for this expenditure?

Select one:

a.5.53 years

b.3.49 years

c.4.20 years

d.5.07 years