Exercise 11-4 Payback period; accelerated depreciation LO P1 A machine can be purchased for $254,000 and used for five years, yielding the following net incomes. In projecting net incomes, double-declining depreciation is applied using a five-year life and a zero salvage value. Year 1 $18,000 Year 2 $28,000 Year 3 $50,000 Year 4 $49,500 Year 5 $115,000 Net income Compute the machine's payback period (ignore taxes). (Round payback period answer to 3 decimal places.) Computation of Annual Depreciation Expense Annual Depr. (40% Accumulated of Book Value) Depreciation at Year-End Beginning Book Value Year Ending Book Value 1 2 3 4 ES 5 Annual Cash Flows Year Net income Depreciation Net Cash Flow Cumulative Cash Flow $ (254,000) 0 $ 1 2 (254.000) 18,000 28,000 50.000 49,500 115.000 3 50,000 4 49,500 115.000 50.000 99.500 214,500 5 Payback period years