Question 4: What goes in the blanks?

A machine can be purchased for $236,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 Year 2 Year 3 Year 4 Year 5 Net income $ 22,500 $ 42,000 $57,000 $59,000 $ 107,000 Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Year Beginning Book Value Annual Depr. (40% of Book Value) Accumulated Depreciation at Year-End Ending Book Value 1 2 3 4 5 Annual Cash Flows Year Net income Depreciation Net Cash Flow Cumulative Cash Flow 0 $ $ (236,000) 1 (236,000) 22,500 42,000 2 3 57,000 4 59,000 5 107,000 Payback period = years