Payback Period

Payson Manufacturing is considering an investment in a new automated manufacturing system. The new system requires an investment of $1,200,000 and either has:

1. Even cash flows of $400,000 per year or
2. The following expected annual cash flows: $150,000, $150,000, $400,000, $400,000, and $100,000.

Required:

Calculate the payback period for each case. Round your answer to one decimal place.

a.	years
b.	years