The Sip & Dip Donut company is considering the acquisition of a new automatic donut dropper for $$540,000.$ The machine will have a six$-$year life and will produce before tax cash savings of $$200,000$ each year. The asset is to be depreciated using the straight$-$line method with no salvage value. The company's tax rate is $40$ percent.

The payback period is

Question $10$ options:

$3\mathrm{.}75$ years

$5$ years

$7\mathrm{.}50$ years

$3\mathrm{.}46$ years