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A company is considering the purchase of a new machine for $66,000. Management predicts that the machine can produce sales of $22,000 each year for
A company is considering the purchase of a new machine for $66,000. Management predicts that the machine can produce sales of $22,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $10,400 per year including depreciation of $5,800 per year. Income tax expense is $4,640 per year based on a tax rate of 40%. What is the payback period for the new machine? Multiple Choice 3.00 years. 6.73 years 5.17 years 11.38 years 1719 years
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