A company has the choice of either selling 660 defective units as scrap or rebuilding them. The company could sell the defective units as they are for $3.90 per unit. Alternatively, it could rebuild them with incremental costs of $1.00 per unit for materials, $1.00 per unit for labor, and $0.80 per unit for overhead, and then sell the rebuilt units for $6.00 each. What is the amount of incremental cost from rebuilding?

Multiple Choice

$2.10 per unit.

$6.00 per unit.

$9.90 per unit.

$2.80 per unit.

$0.70 per unit.

A company is considering the purchase of a new machine for $52,000. Management predicts that the machine can produce sales of $16,400 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,600 per year including depreciation of $4,400 per year. The company's tax rate is 40%. What is the payback period for the new machine?

Multiple Choice

3.17 years.

6.19 years.

5.37 years.

11.82 years.

24.07 years.