A company is planning to purchase a machine that will cost $24,000, have a six-year life, and be depreciated over a three-year period with 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		$90,000
Costs:
Manufacturing	$52,000
Depreciation on machine	4,000
Selling and administrative expenses	30,000	(86,000)
Income before taxes		$4,000
Income tax (50%)		(2,000)
Net income		$2,000

24 years.

12 years.

6 years.

4 years.

1 year.