A company is planning to purchase a machine that will cost $24,000 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				$	90,000
Costs:
Manufacturing	$	52,000
Depreciation on machine		4,000
Selling and administrative expenses		30,000		(	86,000	)
Income before taxes				$	4,000
Income tax (50%)					(2,000	)
Net income				$	2,000

Multiple Choice

24 years.

12 years.

6 years.

4 years.

1 year.