Sinclair is considering the acquisition of new machinery that will produce uniform benefits over the next eight years. The following information is available: Annual savings in cash operating costs:$350,000 Annual depreciation expense:$250,000 If the company is subject to a 30% tax rate, what denominator should be used to compute the machinery's payback period?
A. $320,000.
B. $245,000.
C. $170,000.
D. $70,000.
E. None of the answers is correct.
Answer: A
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