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Fitzgerald Company is planning to acquire a $250,000 machine that will provide increased efficiencies, thereby reducing annual cash operating costs...

Fitzgerald Company is planning to acquire a $250,000 machine that will provide increased efficiencies, thereby reducing annual cash operating costs by $80,000. The machine will be depreciated by the straight line method over a five-year life with no salvage value at the end of five years. Assuming a 40% income tax rate and that cash flows occur evenly throughout the year, the machine's estimated payback period (rounded to two decimal places) is:

5.21 years.3.68 years.3.21 years.3.13 years.4.81 years.

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