A machine is under consideration for purchase. The cost of the machine is Php Php 170 000. Each year it operates, the machine will generate a savings of Php 40 000. Given an effective annual interest rate of 18 %, what is the discount payback period on the purchase in the machine?

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 13EB: Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for...
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A machine is under consideration for purchase. The cost of the machine is Php Php 170 000. Each year it operates, the machine will generate a savings of Php 40 000. Given an effective annual interest rate of 18 %, what is the discount payback period on the purchase in the machine?  

a. 8.75 years
b. 5.77 years
c. 7.69 years
d. 6.12 years
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