Zen Company is considering purchasing a new machine. This investment would cost AED200,000 to be invested today. The assets will last for 5 years with no salvage value. The company uses a straight line depreciation method. The maximum payback period acceptable by the company is 3 years.

The management has prepared some projected income statements for the next 5 years.

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	95,000	95,000	100,000	110,000	120,000
Expenses: COGS Rent Salaries Depreciation	30,000 10,000 15,000 30,000	31,000 10,000 15,000 30,000	32,000 10,000 17,000 30,000	35,000 10,000 17,000 30,000	35,000 10,000 18,000 30,000
Net Income	10,000	15,000	15,000	18,000	27,000

1. Calculate the payback period for this project by using the below tables and recommend whether this project should be accepted?

2. Considering the advantages and the disadvantages of the payback period, discuss its use in evaluating different projects.