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A company is planning to purchase a machine that will cost $70,308, have a six-year life, and will have 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   $ 243,000 Costs:     Manufacturing $ 145,800   Depreciation on machine 4,000   Selling and administrative expenses 81,000 (230,800) Income   $ 12,200 Multiple Choice 13.02 years. 6.51 years. 1.09 year. 26.04 years. 4.34 years.

A company is planning to purchase a machine that will cost $70,308, have a six-year life, and will have 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   $ 243,000 Costs:     Manufacturing $ 145,800   Depreciation on machine 4,000   Selling and administrative expenses 81,000 (230,800) Income   $ 12,200 Multiple Choice 13.02 years. 6.51 years. 1.09 year. 26.04 years. 4.34 years.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company is planning to purchase a machine that will cost $70,308, have a six-year life, and will have 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   $ 243,000
Costs:    
Manufacturing $ 145,800  
Depreciation on machine 4,000  
Selling and administrative expenses 81,000 (230,800)
Income   $ 12,200

Multiple Choice

  • 13.02 years.

  • 6.51 years.

  • 1.09 year.

  • 26.04 years.

  • 4.34 years.

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