A machine can be purchased for $252,000 and used for five years,yielding the following net incomes. In projecting net incomes,double-declining depreciation is applied, using a five-year lifeand a zero salvage value.

	Year 1				Year 2				Year 3				Year 4				Year 5
Net income		$	13,000			$	28,000			$	62,000			$	48,000			$	101,000

Compute the machine’s payback period (ignore taxes). (Roundpayback period answer to 3 decimal places.)

Computation of Annual Depreciation Expense

Year       Beginning BookValue    Annual Depr. (40% of BookValue)           Accumulated Depreciation atYear-End               Ending BookValue          

1                                                                             

2                                                             

3                                                             

4                                                             

5                                                             

Annual Cash Flows

Year       Netincome        Depreciation      Net CashFlow   Cumulative Cash Flow   

0             $(252,000)                                          $(252,000)          

1             13,000                                  

2             28,000                                  

3             62,000                                  

4             48,000                                  

5             101,000                                                

Payback period=                             years