A new manufacturing machine is expected to cost $290,000, have an eight-year life, and a $35,000 salvage value. The machine will yield an annual incremental after-tax income of $36,000 after deducting the straight-line depreciation. Compute the payback period for the purchase.

Multiple Choice

a. 9.0 years.

b. 3.8 years.

c. 4.3 years.

d. 8.1 years.

e. 5.4 years.