The General Manager has received quotes for the relatively modest structural alterations and the gym/spa equipment and it appears that the project would require an initial cash outflow of 650,000. The hotel's bank has said that they would be willing to provide a bank loan for the money required at a 10% per annum fixed interest rate (= cost of capital). It is established that the new fitness suite is expected to produce the following additional cash inflows over the first five years (these do not include the original cash outlay required, nor any cash inflow from the equipments residual value at the end of its anticipated 5 year life) :- Year 1 120,000 cash inflow Year 2 160,000 cash inflow Year 3 200,000 cash inflow Year 4 220,000 cash inflow Year 5 220,000 cash inflow It is anticipated that the second-hand equipment will be sold for 50,000 at the end of the fifth year. (a) Calculate the Payback Period on this project (expressed in years and months) and explain what this figure means and the pros and cons of it as a means of appraissing proposed capital investments.