Read discussion question 5 on page 246, and answer the questions at the end. Explain your answers. Define a payback period in words, and show in numbers how you compute it in this question.

water filters with 5. The chief engineer for Portland Purifiers, a maker of industrial annual sales of $5 million, has an idea for a new product that would represent a major (and patentable) improvement over current market offerings. She estimates that the development of the product will cost half a million dollars, including tooling the manufacturing line. The last product launch cost about $200,000 in marketing and promotion costs. She thinks the product would sell for about $50,000 and should sell 75 units in year 1, 140 in year 2, and then level out at 200 per year. Contribution margin is 40 percent. Should the company continue with this project? What do you need to know about the company in order to un- derstand its decision to go or not go ahead? What is the payback period