Q32)

A company is considering the purchase of a new machine for $67,000. Management predicts that the machine can produce sales of $20,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,200 per year including depreciation of $5,900 per year. The company's tax rate is 40%. What is the payback period for the new machine?

3.35 years.

6.77 years.

5.16 years.

11.36 years.

26.59 years.