A company is planning to purchase a machine that will cost $24,000, have a six-year life, and will have no salvage value. The company expects to sell the machines output of 3,000 units evenly throughout each year. A projected income statement for each year of the assets life appears below. What is the payback period for this machine?

Sales		$ 90,000
Costs:
Manufacturing	$ 54,000
Depreciation on machine	4,000
Selling and administrative expenses	30,000	(88,000)
Income		$ 2,000

Multiple Choice

24 years.

4 years.

12 years.

1 year.

6 years.