A company is planning to purchase a machine that will cost $70,308, 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		$ 243,000
Costs:
Manufacturing	$ 145,800
Depreciation on machine	4,000
Selling and administrative expenses	81,000	(230,800)
Income		$ 12,200

Multiple Choice

• 13.02 years.

• 6.51 years.

• 1.09 year.

• 26.04 years.

• 4.34 years.