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Boccardi Inc., has invested in new pasta manufacturing equipment at a cost of $48,000. The...

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Accounting

Boccardi Inc., has invested in new pasta manufacturing equipment at a cost of $48,000. The equipment has an estimated useful life of eight years. Estimated annual sales and operating expenses related to the pasta equipment follow:

Annual sales $ 88,000
Labor costs (72,000 )
Depreciation of equipment (6,000 )
Operating income $ 10,000
Income taxes (4,000 )
Net income $ 6,000

The estimated payback of the investment in the pasta equipment is:

3.0 years.

4.0 years.

6.0 years.

8.0 years.

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