The Riverbed Company is planning to purchase $591,800 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 $235,000 2 165,500 3 118,500 4 62,400 5 62,400 6 43,500 7 43,500 Total $730,800

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

The company select an option make this investment.