What is the payback period for the new machine

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A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the payback period for the new machine?

A. 3.0 years

B. 6.0 years

C. 7.5 years

D. 12.0 years

E. 20.0 years

Reference no: EM131295131

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