question 4

The Flounder Company is planning to purchase $525,600 of equipment with an estimated seven- year life and no estimated salvage value. The company has projected the following annual cash flows for the investment. Year Projected Cash Flows $216,000 164,500 119,500 76,800 76,800 50,500 50,500 Total $754,600 (a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year. Payback period years and months