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Business, 22.05.2020 03:05 genyjoannerubiera

Olinick Corporation is considering a project that would require an investment of $334,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.):

Sales $ 230,000
Variable expenses 18,000
Contribution margin 212,000
Fixed expenses:
Salaries 36,000
Rents 49,000
Depreciation 44,000
Total fixed expenses 129,000
Net operating income $ 83,000
The scrap value of the project's assets at the end of the project would be $26,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

Multiple Choice

2.6 years

4.0 years

2.5 years

3.1 years

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Answers: 1

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