Reference no: EM132547372

Valley Hospital is considering the purchase of new medical equipment for $25,000. The old equipment has zero salvage value. The costs associated with operating the equipment are:

                       Old Equipment           New Equipment

Labour               $9,000                         $4,500

Maintenance           2,000                        1,200

Miscellaneous         1,500                          1,300

Amortization                8,000                       4,750

Question 1: If the new machine is purchased and ignoring income taxes, the payback period is:

Group of answer choices

A: 3.57 years

B: 4.55 years

C: 2.13 years

D: 2.86 years