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A company is planning to purchase a machine that will cost $54,000 with a six-year life and no salvage value. The company expects to sell
A company is planning to purchase a machine that will cost $54,000 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? $ 120,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (35%) Net income $62,000 9,000 40,000 (111, 000) $ 9,000 (3,150) $ 5,850 Multiple Choice 3.64 years 9.23 years. 1.36 year. 18.46 years 6.00 years
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