A New Manufacturing Machine Is Expected to Cost $286,000, Have

question 53

Multiple Choice

A new manufacturing machine is expected to cost $286,000, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation. Compute the payback period for the purchase.

• A) 8.7 years.
• B) 3.8 years.
• C) 4.3 years.
• D) 7.3 years.
• E) 5.4 years.

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Definitions:

Reorganization

A process by which a company or entity changes its structure, operations, or financial setup, often to recover from financial distress or improve efficiency.

Liquidation

The process of closing a business and distributing its assets to claimants, typically when it is insolvent.

Bankruptcy Court Judges

Judges specializing in overseeing bankruptcy cases, making decisions on the dischargeability of debts and other related matters.

Congressional Authority

The powers granted to the United States Congress under the Constitution, including legislation, oversight, and the declaration of war.