Caliber Company Is Considering the Purchase of a New Machine

Multiple Choice

Caliber Company is considering the purchase of a new machine costing $800,000. The company's management is estimating that the new machine will generate additional cash flows of $180,000 a year for ten years and have a salvage value of $50,000 at the end of ten years. What is the machine's payback period?

A) 4.44 years
B) 6.77 years
C) 3.33 years
D) 5.33 years