COTB MC Qu$.14-24($Static$)$ Assume that a company buys a$...$

Assume that a company buys a new machine for $$220,000$ that has a useful life of five years and a $$20,000$ salvage value. The new machine will replace an old machine that can be sold for a salvage value of $$10,000.$ The machine will generate incremental contribution margin of $$60,000$ per year. The only fixed expense associated with the new machine is its annual depreciation of $$40,000$ per year. What is the payback period for this investment?

Multiple Choice

$3\mathrm{.}5$ years

$10\mathrm{.}5$ years

$3\mathrm{.}167$ years

$9\mathrm{.}5$ years