A Company Is Considering Purchasing a Machine That Costs $400,000

question 131

Multiple Choice

A company is considering purchasing a machine that costs $400,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual revenues are expected to be $100,000 and annual operating expenses exclusive of depreciation expense are expected to be $38,000. The straight-line method of depreciation would be used. The cash payback period on the machine is

• A) 8.0 years.
• B) 7.5 years.
• C) 6.5 years.
• D) 3.2 years.

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Definitions:

Color Blindness

A condition in which an individual has difficulty distinguishing between certain colors, typically red and green.

Males Affected

Refers to phenomena, conditions, or studies specifically concerning or impacting male individuals.

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A genetic disorder characterized by an inability to metabolize the amino acid phenylalanine, leading to potential brain damage if untreated.

Amino Acid

Organic compounds that serve as the building blocks of proteins, necessary for various bodily functions and processes.