A company is considering the purchase of a new machine for $64,000. Management predicts that the machine can produce sales of $19,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,800 per year including depreciation of $5,600 per year. Income tax expense is $4,480 per year based on a tax rate of 40%. What is the payback period for the new machine?

Multiple Choice

3.37 years.

6.67 years.

5.19 years.

11.43 years.

28.07 years.