A Company Is Considering the Purchase of a New Machine

question 135

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 8 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.

---

Definitions:

Present Immigrants

Refers to the current generation or cohort of immigrants residing in a country, distinct from past waves of immigrants.

Past Immigrants

Individuals who have migrated to a new country from their homeland in previous periods, often shaping the demographic and cultural landscape of the new place.

Noncitizens

Individuals who do not hold citizenship in the country in which they live, often subject to different legal rights and obligations than citizens.

Citizens

Members of a political community, typically having both rights and duties associated with membership in a given nation-state.