Question - 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?
17.14 years.
6.00 years.
4.50 years.
10.29 years.
5.45 years.