The Management of Arnold Corporation is considering the purchase of a new machine costing $400,000. The residual value of the machine is estimated to be $0. The companys desired rate of return is 8%. The estimated income and net cash flows associated with the investment are as follows:

Year	Operating Income	Net Cash Flow
1	$100,000	$180,000
2	40,000	120,000
3	20,000	100,000
4	10,000	90,000
5	10,000	90,000

The payback period for this investment is:

	A.	2 years
	B.	5 years
	C.	none of these
	D.	3 years
	E.	4 years

The net present value for this investment is:

A.

negative $261,710

B.

positive $261,710

C.

negative $30,850

D.

none of these

E.

positive $30,850