A company is planning to purchase a machine that will cost $36,000 with a six-year...
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A company is planning to purchase a machine that will cost $36,000 with a six-year life and 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?
A company is planning to purchase a machine that will cost $36,000 with a six-year life and 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? $102,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (35%) Net income $56,000 6,000 34,000 (96,000) $ 6,000 (2,100) $ 3,900 6.00 years. 18.46 years. 3.64 years
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