(Ignore Income Taxes in This Problem

Multiple Choice

(Ignore income taxes in this problem.) A company with $600,000 in operating assets is considering the purchase of a machine that costs $72,000 and which is expected to reduce operating costs by $18,000 each year. These reductions in cost occur evenly throughout the year. The payback period for this machine in years is closest to:

A) 4 years
B) 8.3 years
C) 0.25 years
D) 33.3 years