Vandezande Inc. is considering the acquisition of a new machine that costs $426,000 and has a useful life of 5 years with no salvage value. The incremental net operating income and incremental net cash flows that would be produced by the machine are (Ignore income taxes.):

	Incremental Net Operating Income			Incremental Net Cash Flows
Year 1	$	67,000		$	148,000
Year 2	$	73,000		$	150,000
Year 3	$	84,000		$	175,000
Year 4	$	47,000		$	149,000
Year 5	$	89,000		$	151,000

Assume cash flows occur uniformly throughout a year except for the initial investment.

The payback period of this investment is closest to: (Round your answer to 1 decimal place.)

Garrison 16e Rechecks 2017-11-15

Garrison_16e_Rechecks_2019_10_12

Multiple Choice

• 5.0 years

• 2.1 years

• 2.7 years

• 4.3 years