Sinclair Is Considering the Acquisition of New Machinery That Will

Multiple Choice

Sinclair is considering the acquisition of new machinery that will produce uniform benefits over the next eight years. The following information is available:
Annual savings in cash operating costs: $350,000
Annual depreciation expense: $250,000
If the company is subject to a 30% tax rate, what denominator should be used to compute the machinery's payback period?

A) $70,000.
B) $170,000.
C) $245,000.
D) $320,000.
E) None of the answers is correct.