Olinick Corporation is considering a project that would require an investment of $338,000 and would...
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Accounting
Olinick Corporation is considering a project that would require an investment of $338,000 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 | $ | 269,000 | |
| Variable expenses | 20,000 | ||
| Contribution margin | 249,000 | ||
| Fixed expenses: | |||
| Salaries | 28,000 | ||
| Rents | 41,000 | ||
| Depreciation | 36,000 | ||
| Total fixed expenses | 105,000 | ||
| Net operating income | $ | 144,000 | |
The scrap value of the project's assets at the end of the project would be $18,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:
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