A Company Is Considering the Purchase of a New Machine

question 60

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 $12,000 per year including depreciation of $3,000 per year.Income tax expense is $1,600 per year based on a tax rate of 40%.What is the payback period for the new machine?

• A)20.0 years.
• B)6.0 years.
• C)7.5 years.
• D)12.0 years.
• E)8.9 years.

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Definitions:

Action Potential

A temporary reversal in the electrical potential across a plasma membrane that occurs when a cell has been activated by a stimulus, essential for nerve impulse conduction.

Electrical Charge

A physical property of particles or objects that causes them to attract or repel each other due to the presence of electric charge, either positive or negative.

Neuron

A cell dedicated to sending signals in the form of nerve impulses; known as a neuron.

Antagonist

A substance that interferes with or inhibits the physiological action of another, particularly in pharmacology referring to a drug that blocks the action of a neurotransmitter or hormone.