Valley Hospital Is Considering the Purchase of New Medical Equipment

Valley Hospital is considering the purchase of new medical equipment for $25,000. The old equipment has zero salvage value. The costs associated with operating the equipment are: Old Equipment New Equipment
Labour $9,000 $4,500
Maintenance 2,000 1,200
Miscellaneous 1,500 1,300
Amortization 8,000 4,750
If the new machine is purchased and ignoring income taxes, the payback period is:

A) 3) 57 years
B) 2) 13 years
C) 2) 86 years
D) 4) 55 years