Vandezande Inc. is considering the acquisition of a new machine that costs $461,000 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 Incremental Net
Operating Income Cash Flows
Year 1 $69,000 $149,000
Year 2 $75,000 $150,000
Year 3 $86,000 $181,000
Year 4 $49,000 $151,000
Year 5 $91,000 $153,000
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.)
a. 2.0 years
b. 5.0 years
c. 41 years