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COTB MC Qu . 1 4 - 2 4 ( Static ) Assume that a company buys a . . . Assume that a company

COTB MC Qu.14-24(Static) Assume that a company buys a...
Assume that a company buys a new machine for $220,000 that has a useful life of five years and a $20,000 salvage value. The new machine will replace an old machine that can be sold for a salvage value of $10,000. The machine will generate incremental contribution margin of $60,000 per year. The only fixed expense associated with the new machine is its annual depreciation of $40,000 per year. What is the payback period for this investment?
Multiple Choice
3.5 years
10.5 years
3.167 years
9.5 years
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