A Company Is Considering the Purchase of a New Machine

question 48

Multiple Choice

A company is considering the purchase of a new machine for $72,000.Management predicts that the machine can produce sales of $21,000 each year for the next eight years.Expenses are expected to include direct materials,direct labor,and factory overhead totaling $5,000 per year plus depreciation of $9,000 per year.The company's tax rate is 40%.What is the payback period for the new machine?

• A) 5.45 years
• B) 17.14 years
• C) 10.29 years
• D) 4.50 years
• E) 6.00 years

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Franchising

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