A company is planning to purchase a machine that will cost $57,000 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine?

Sales				$	132,000
Costs:
Manufacturing	$	66,000
Depreciation on machine		9,500
Selling and administrative expenses		44,000			(119,500	)
Income before taxes				$	12,500
Income tax (30%)					(3,750	)
Net income				$	8,750

• 6.00 years.

• 6.51 years.

• 3.12 years.

• 1.88 year.

• 13.03 years.