A Company Is Considering the Purchase of a New Machine

question 112

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 $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

• A) 3.0 years.
• B) 6.0 years.
• C) 7.5 years.
• D) 12.0 years.
• E) 20.0 years.

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Definitions:

Salivary Glands

Exocrine glands located around the mouth that produce saliva, which begins the process of digestion and helps maintain oral health.

Basement Membrane

A thin, fibrous extracellular matrix that separates epithelial and endothelial cells from underlying connective tissue.

Connective

Referring to connective tissue in the body, which supports, binds together, and protects organs, including bones, tendons, and fat.

Nervous

The nervous system is the part of an organism that coordinates its actions and sensory information by transmitting signals to and from different parts of its body.