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A company is considering purchasing a new machine for $40,000. It is estimated that the machine will have a useful life of 10 years and
A company is considering purchasing a new machine for $40,000. It is estimated that the machine will have a useful life of 10 years and a zero salvage value. The machine will generate an after-tax net income of $4,000 per year. Annual depreciation expense will be $4,000. What is the payback period for the new machine?
Select one:
a.
10 years.
b.
4 years.
c.
20 years.
d.
5 years.
e.
40 years.
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