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.