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A company is considering the purchase of a new machine for $44,800. Management predicts that the machine can produce sales of $28,000 each year for
A company is considering the purchase of a new machine for $44,800. Management predicts that the machine can produce sales of $28,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $14,400 per year plus depreciation of $7,200 per year. The company's tax rate is 40%. What is the payback period for the new machine? |
11.7 years
4.1 years
3.1 years
1.6 years
6.2 years
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