A company is planning to purchase a machine that will cost $27,600, have a six-year life, and be depreciated over a six-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				$	108,000
Costs:
Manufacturing	$	52,600
Depreciation on machine		4,600
Selling and administrative expenses		36,000			(93,200	)
Income before taxes				$	14,800
Income tax (40%)					(5,920	)
Net income				$	8,880

Multiple Choice

2.95 years.

6.00 years.

6.22 years.

2.05 years.

3.11 years.