A company is considering the purchase of a new machine for $115,560. Management predicts that the machine can produce sales of $25,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $20,800 per year, including depreciation of $6,600 per year. What is the payback period for the new machine?

Multiple Choice

13.80 years.

7.80 years.

10.70 years.

21.80 years.

9.30 years.