A Company Is Considering the Purchase of a New Machine

question 60

Multiple Choice

A company is considering the purchase of a new machine for $48,000.Management predicts that the machine can produce sales of $16,000 each year for the next 10 years.Expenses are expected to include direct materials,direct labor,and factory overhead totaling $12,000 per year including depreciation of $3,000 per year.Income tax expense is $1,600 per year based on a tax rate of 40%.What is the payback period for the new machine?

• A)20.0 years.
• B)6.0 years.
• C)7.5 years.
• D)12.0 years.
• E)8.9 years.

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Definitions:

Dominance Structuring

The organization of individuals within a group that establishes a hierarchy of power or influence.

Unwise Decision

A choice or judgment that is made without proper consideration of the consequences, often leading to negative outcomes.

Decision-Critical Attributes

Key factors or characteristics that are crucial to making an informed and effective decision in a given context.

Evaluating Options

The process of examining and comparing different choices to make the best decision.