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A company is planning to purchase a machine that will cost $54.000 with a six-year life and no salvage value The company expects to sell
A company is planning to purchase a machine that will cost $54.000 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? 135,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (40%) Net income $67,000 9,000 45,000 (121,000) $ 14,000 5,600) $ 8,400 Multiple Choice 6.43 years. 12 86 years. 3.10 years. 1.90 year. 6.00 years
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