Newborn Hospital is considering the possibility of two new purchases, a new EKG$/$ECG machine or a new anesthesia machine.

Each project would require an investment of $$750,000.$

The expected life for each is five years with no expected salvage value.

The net cash flows associated with the two independent projects are as follows.

Year

EKG$/$ECG Machine

Anesthesia Machine

$1$

$$375,000$

$$75,000$

$2$

$150,000$

$75,000$

$3$

$300,000$

$525,000$

$4$

$150,000$

$600,000$

$5$

$75,000$

$675,000$

The required rate of return is $12$ percent.

The payback period for anesthesia machine is

$3\mathrm{.}13$ years

$4\mathrm{.}25$ years

$10$ years

$5$ years