The Grouper Company is planning to purchase $ 592,000 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			$ 219,000
2			167,000
3			122,000
4			67,200
5			67,200
6			53,000
7			53,000
Total			$ 748,400

(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 Grouper requires a payback period of 4 years or less, should the company make this investment?

The company: should/not should make this investment.