A New Manufacturing Machine Is Expected to Cost $278,000,have an Eight-Year

question 115

Multiple Choice

A new manufacturing machine is expected to cost $278,000,have an eight-year life,and a $30,000 salvage value.The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation.Compute the payback period for the purchase.

• A)8.7 years.
• B)3.8 years.
• C)4.2 years.
• D)7.3 years.
• E)5.4 years.

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Definitions:

Mailbox Rule

is a legal principle that an offer, acceptance, or any other form of legal communication is considered effective once it is dispatched, not when it is received.

Rebate

A partial refund given to someone who has paid too much for tax, rent, or a utility.

Mailbox Rule

The mailbox rule is a legal principle that an offer is considered accepted once the acceptance is properly placed in the mail, even if it is lost or delayed.

Effective Upon Dispatch

Effective upon dispatch refers to the principle that certain actions, such as the sending of a notification or document, are considered effective from the moment they are sent, not when they are received.