The Bridgeport Company is planning to purchase $598,700 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

$256,400

2

151,400

3

118,800

4

61,800

5

61,800

6

41,700

7

41,700

Total

$733,600

(a) Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year.

Payback period enter a number of years years and enter a number of months months.

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

The company select an option make this investment.