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What is the payback period for this investment

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Question - Assume that a company buys a new machine for $220,000 that has a useful life of five years and a $20,000 salvage value. The new machine will replace an old machine that can be sold for a salvage value of $10,000. The machine will generate Incremental contribution margin of $52,500 per year. The only fixed expense associated with the new machine is its annual depreciation of $40,000 per year. What is the payback period for this Investment?

Reference no: EM133079018

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