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A company is considering the purchase of a new machine for $72,000. Management predicts that the machine can produce sales of $21,000 each year for the next 8 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $5,000 per year plus depreciation of $9,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

a) 17.14 years.

b) 6.00 years.

c) 4.50 years.

d) 10.29 years.

e) 5.45 years.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M954021

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