Olinick Corporation is considering a project that would require an investment of $329,000 and would...
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Accounting
Olinick Corporation is considering a project that would require an investment of $329,000 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
$
215,000
Variable expenses
28,000
Contribution margin
187,000
Fixed expenses:
Salaries
35,000
Rents
48,000
Depreciation
43,000
Total fixed expenses
126,000
Net operating income
$
61,000
The scrap value of the project's assets at the end of the project would be $25,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
Multiple Choice
3.2 years
4.3 years
3.0 years
5.4 years
Answer & Explanation
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