A company is considering the purchase of a new machine for $63,000. Management predicts that the machine can produce sales of $17,500 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $6500 per year including depreciation of $5500 per year. Income tax expense is $4400 per year based on a tax rate of 40%. What is the payback period for the new machine?

5.21 years.

3.60 years.

42.00 years.

6.63 years.

11.45 years.