Valeria Products is considering the purchase of a new machine costing $800,000. The machine is expected to reduce annual operating costs by $120,000 and will be depreciated using the straight-line method (with no half-year convention) over ten years with no salvage value at the end of its useful life. Assuming a 30 percent income tax rate, the machine's payback period is:
A) 5.56 years.
B) 6.76 years.
C) 9.26 years.
D) 3.57 years.
A
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