TheWhispering WindsCompany is planning to purchase $661,100of 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

$261,0002

176,6003

126,9004

82,8005

82,8006

53,5007

53,500Total

$837,100

(a)Calculate the payback period for the proposed equipment purchase. Assume that all cash flows occur evenly throughout the year.

Payback_____ years and of months

(b)IfWhispering Windsrequires a payback period of4years or less, should the company make this investment?

The company

select an option

should orshould not make this investment.