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A company is planning to purchase a machine that will cost $26,532, have a six-year...

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Accounting

A company is planning to purchase a machine that will cost $26,532, have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine?

Sales $ 99,000
Costs:
Manufacturing $ 59,400
Depreciation on machine 4,400
Selling and administrative expenses 33,000 (96,800)
Income $ 2,200

Multiple Choice

6.03 years.

1.01 year.

12.06 years.

4.02 years.

24.12 years.

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