Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Build Corporation wants to purchase a new machine for $298,000. Management predicts that the machine can produce sales of $205,000 each year for the next
Build Corporation wants to purchase a new machine for $298,000. Management predicts that the machine can produce sales of $205,000 each year for the next 5 years, Expenses are expected to include direct materials, direct labor, and factory overhead (excluding dopreciation) totaling $68,000 per year, The firm uses straight-line depreciation with no residust value for all depreciable assets. Build's combined income tax rate is 40%, Management requires a minimum after-tax rate of return of 14% on all investments. What is the payback period for the new machine (rounded to nesrest one-tenth of a year)? (Assume that the cash inflows occur evenly throughout the yeae) Multiple Choice 2.2 years. 2.4 years. 2.8 years. 3.3 years. 3.9 years
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started