Ostermeyer Corporation is considering a project that would require an initial investment of $307,000 and...
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Accounting
Ostermeyer Corporation is considering a project that would require an initial investment of $307,000 and would last for 8 years. The incremental annual revenues and expenses for each of the 8 years would be as follows (Ignore income taxes.):
Sales
$ 213,000
Variable expenses
52,000
Contribution margin
161,000
Fixed expenses:
Salaries
$ 25,000
Rents
35,000
Depreciation
34,500
Total fixed expenses
94,500
Net operating income
$ 66,500
At the end of the project, the scrap value of the project's assets would be $17,500.
Required:
Determine the payback period of the project.
Note: Round your answer to 2 decimal places.
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