A company is planning to purchase a machine that will cost $24,000 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?      Sales   $90,000  Costs:       Manufacturing$52,000     Depreciation on machine 4,000     Selling and administrative expenses 30,000 (86,000) Income before taxes   $4,000  Income tax (50%)    (2,000) Net income   $2,000  

A. 24 years.
B. 12 years.
C. 1 year.
D. 4 years.
E. 6 years.


Answer: D

Business

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