The Martinez Company is planning to purchase $ 504,100 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			$ 195,500
2			141,500
3			91,500
4			64,800
5			64,800
6			33,500
7			33,500
Total			$ 625,100

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

The company select an option should notshould make this investment.

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