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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Sales | $ 243,000 | |
---|---|---|
Costs: | ||
Manufacturing | $ 145,800 | |
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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