Beauchamp Advertising Is Considering the Purchase of a Special Purpose

Multiple Choice

Beauchamp Advertising is considering the purchase of a special purpose machine for $56 000. It is expected to have a useful life of 7 years with no salvage value. The firm's accountant estimates savings in cash operating costs of $9 800 per year. Calculate the pay-back period.

A) 8 years
B) 6 years
C) 5.7 years
D) 4.4 years