Cobe Company has already manufactured 15,000 units of Product A at a cost of $25 per unit. The 15,000 units can be sold at this stage for $460,000. Alternatively, the units can be further processed at a $270,000 total additional cost and be converted into 5,800 units of Product B and 11,200 units of Product C. Per unit selling price for Product B is $109 and for Product C is $51.

Compute the payback period for each of these two separate investments: a. A new operating system for an existing machine is expected to cost $280,000 and have a useful life of four years. The system yields an incremental after-tax income of $80,769 each year after deducting its straight-line depreciation. The predicted salvage value of the system is $11,000. b. A machine costs $200,000, has a $15,000 salvage value, is expected to last ten years, and will generate an after-tax income of $44,000 per year after straight-line depreciation. Payback Period Choose Numerator: 1 Choose Denominator: = Payback Period Payback period 0 a b. 0