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Solutions Inc. would like to purchase a new production machine for $300,000. The machine is expected to have a life of four years, and a
Solutions Inc. would like to purchase a new production machine for $300,000. The machine is expected to have a life of four years, and a salvage value of $50,000. Annual maintenance costs will total $30,000. Annual labor and material savings are predicted to be $150,000. The company's required rate of return is 6 percent. What is the payback period for this investment (round to the nearest month)?
a. 3 year, 5 months.
b. 2 years, 5 months.
c. 2 years, 6 months.
d. 3 years, 6 months.
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