Reinhart Company Would Like to Purchase a New Machine for $5,000,000.The

question 34

Multiple Choice

Reinhart Company would like to purchase a new machine for $5,000,000.The machine is expected to have a life of five years,and a salvage value of $1,000,000.Annual maintenance costs will total $300,000.Annual labor and material savings are predicted to be $2,000,000.The company's required rate of return is 26 percent.
What is the payback period for this investment (round to the nearest month) ?

• A)1 year,11 months.
• B)1 year,9 months.
• C)2 years,9 months.
• D)2 years,11 months.
• E)None of the answer choices is correct.

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