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A company is considering the purchase of a new machine for $65,000. Management predicts that the machine can produce sales of $21,000 each year for
A company is considering the purchase of a new machine for $65,000. Management predicts that the machine can produce sales of $21,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $9,600 per year including depreciation of $5,700 per year. Income tax expense is $4,560 per year based on a tax rate of 40%. What is the payback period for the new machine?
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