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
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3.2 years
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4.3 years
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3.0 years
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5.4 years
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