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Question(s) / Instruction(s):

A company is considering the purchase of a new machine for $128,000. Management predicts that the machine can produce sales of $32,000 each year for the next 8 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $7,500 per year plus depreciation of $10,800 per year. The company's tax rate is 38%. What is the payback period for the new machine?

 a)           4.00 years.

b)            5.22 years.

c)            6.63 years.

d)            9.34 years.

e)            15.06 years.

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