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| Teaching Since: | May 2017 |
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| Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
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A company is planning to purchase a machine that will cost $155,000, have a seven-year life, and be depreciated using the straight-line method with no salvage value. The company expects to sell the machine's output of 4,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below: |
| Â |
| Â Â Sales | Â | $212,000 Â Â |
| Â Â Costs: | Â | Â |
| Â Â Manufacturing | $98,000 | Â |
| Â Â Depreciation on machine | 25,000 | Â |
| Â Â Selling and administrative expenses |
70,000 |
(193,000) |
| Â Â Income before taxes | Â | $ 19,000 Â Â |
| Â Â Income tax (50%) | Â | ( 9,500) |
| Â Â Net income | Â |
$ 9,500 Â Â |
 Â
| What is the payback period for this machine? |
| Â | 1.000 year |
| Â | 8.160 years |
| Â | 16.320 years |
| Â | 4.493 years |
| Â | 10.000 years |
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