Paramount Company is considering purchasing new equipment costing $700,000. The management has estimated that the equipment will generate cash flows as follows:

Year 1	$200,000
2	300,000
3	350,000

Present value of $1:

	6%	7%	8%	9%	10%
1	0.943	0.935	0.926	0.917	0.909
2	0.89	0.873	0.857	0.842	0.826
3	0.84	0.816	0.794	0.772	0.751
4	0.792	0.763	0.735	0.708	0.683
5	0.747	0.713	0.681	0.65	0.621

The company's required rate of return is 7%. Using the factors in the table, calculate the present value of the cash inflows. (Round all calculations to the nearest whole dollar)

Calculation of present value of cash inflows:

- The following details are provided by a manufacturing company.

	Product line
Investment	$900,000
Useful life	5 years
Estimated annual net cash inflows for first year	$350,000
Estimated annual net cash inflows for second year	$350,000
Estimated annual net cash inflows for next ten years	$400,000
Residual value	$50,000
Depreciation method	Straight-line
Required rate of return	12%

Calculate the payback period for the investment.

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