(Please type answer.)

Question:

What is the payback in years (use decimal point and take two places past)? According to payback method, was this an acceptable method? One word only.

Capital Budgeting - No taxes. Sam's Structures desires to buy a new crane and accessories to help move and install modular buildings. The machine sells for $75,000 and requires working capital of $10,000. Its estimated useful life is six years and it will have a salvage value of $17,000. Recovery of working capital will be $10,000 at the end of its useful life. Annual cash savings from the purchase of the machine will be $30,000. The company uses straight line depreciation but does not pay taxes. They use discount rate of 10%. An acceptable payback period is four years. Do not use commas or dollar signs. Round to the nearest dollar