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Benson Company has an opportunity to purchase a forklift to use in its heavy equipment...

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Accounting

Benson Company has an opportunity to purchase a forklift to use in its heavy equipment rental business. The forklift would be leased on an annual basis during its first two years of operation. Thereafter, it would be leased to the general public on demand. Benson would sell it at the end of the fifth year of its useful life. The expected cash inflows and outflows follow:

Year Nature of Item Cash Inflow Cash Outflow
2018 Purchase price $ 81,200
2018 Revenue $ 31,500
2019 Revenue 31,500
2020 Revenue 26,500
2020 Major overhaul 8,300
2021 Revenue 17,500
2022 Revenue 15,500
2022 Salvage value 7,100

Required

a.&b. Determine the payback period using the accumulated and average cash flows approaches. (Round your answers to 1 decimal place.)

a. Payback period (accumulated cash flows) years
b. Payback period (average cash flows) years

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