Question
A company is planning to purchase a machine that will cost $33,000 with a six-year life and no salvage value. The company expects to
A company is planning to purchase a machine that will cost $33,000 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 $ 99,000 Costs: Manufacturing Depreciation on machine Income before taxes $55,000 5,500 Selling and administrative expenses 33,000 Income tax (40%) Net income (93,500) $ 5,500 (2,200) $ 3,300 Multiple Choice 1.25 year. 20.00 years. 10.00 years. 6.00 years. 3.75 years.
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