Question $4$

A company is considering a project with the following

characteristics:

Cash outflows:

Immediate investment in equipment: $$452,000$

Cash outflow for equipment maintenance in year

$2$: $$55,000$

Cash inflows:

Cash savings in year $1$: $$50,000$

Cash savings in year $2$: $$100,000$

Cash savings in year $3$: $$100,000$

Cash savings in year $4$: $$150,000$

Cash savings in year $5$: $$200,000$

Salvage value at the end of year $5$: $$60,000$

What is the Payback Period $($in years$)$ for this

project? $($Round your answer to $2$ decimal places.$)$ For reference, abbreviated versions of the present value tables from Chapter $12$ are below. Use these

tables for any present value calculations in the following questions.

Present Value of an ordinary annuity of $$1$ received at the end of the period for $n$ periods.