Payback period for the new machine

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A company is considering the purchase of a new machine for $60,000. Management predicts that the machine can produce sales of $17,200 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $6,800 per year including depreciation of $5,200 per year. Income tax expense is $4,160 per year based on a tax rate of 40%. What is the payback period for the new machine?

Reference no: EM132012310

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