A company is planning to purchase a machine that will cost $31,668, have a six-year life, and will have 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		$ 117,000
Costs:
Manufacturing	$ 70,200
Depreciation on machine	4,000
Selling and administrative expenses	39,000	(113,200)
Income		$ 3,800

• 6.09 years.

• 4.06 years.

• 24.36 years.

• 1.02 year.

• 12.18 years.