MC Qu. 87 A company is considering the...

A company is considering the purchase of a new machine for $68,000. Management predicts that the machine can produce sales of $19,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,000 per year including depreciation of $6,000 per year. Income tax expense is $4,800 per year based on a tax rate of 40%. What is the payback period for the new machine?

Multiple Choice

• 3.58 years.

• 8.50 years.

• 5.15 years.

• 11.33 years.

• 22.67 years.