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Al's Wooden Turnings would like to purchase a specialized bowl-producing machine for $700,000. The machine is expected to have a life of four years and
Al's Wooden Turnings would like to purchase a specialized bowl-producing machine for $700,000. The machine is expected to have a life of four years and a significant salvage value at the end of year four. Maintenance costs will be $30,000 annually. Annual labor and material savings are predicted to be $250,000 each year. Assume both the cash flow of $250,000 in savings and $30,000 in maintenance occurs evenly throughout the year. What is the payback period for the specialized bowl production machine? ; a. 33 months O b. 38 months c. 29 months O d. 36 months
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