Burgers R Us purchased a new fryer for $30,000 to replace its old fryer. The new fryer has a 5 year life and an expected salvage value of $6,000. The old fryer will be sold immediately for its salvage value of $12,000. Annual cost savings from the new fryer are expected to be $10,000 per year.

The payback period of the new machine is closest to:

Multiple Choice

• 4.0 years

• 3.0 years

• 1.4 years

• 1.8 years