Omaha Plating Corporation Is Considering Purchasing a Machine for $1,500,000

Multiple Choice

Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine is expected to generate a constant after-tax income of $100,000 per year for 15 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value.

What is the payback period for the new machine?

A) 4 years.
B) 5 years.
C) 6 years.
D) 10 years.
E) 15 years.