Houston Fashions is considering a new product line that would require an investment of $140,000 in fixtures and displays and $180,000 in working capital. Store managers expect the following pattern of net cash inflows from the new product line over the life of the investment.
Year Amount
1 70,000
2 78,000
3 72,000
4 56,000
5 50,000
6 48,000
7 44,000
a. Compute the payback period for the proposed new product line. Houston Fashions requires a four-year pre-tax payback period on its investments. Round your answer to one decimal places.