The Sarasota Company is planning to purchase $642,200 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			$258,000
2			168,000
3			121,000
4			81,600
5			81,600
6			48,000
7			48,000
Total			$806,200

(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 Sarasota 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.