The Bridgeport Company is planning to purchase $ 528,000 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
1			$ 205,000
2			155,500
3			110,500
4			45,600
5			45,600
6			38,500
7			38,500
Total			$ 639,200

(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.

(b) If Bridgeport requires a payback period of 4 years or less, should the company make this investment?