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A company is considering a project with a cost of $1,260,000 and a 7-year life. There would be no salvage value at the end of
A company is considering a project with a cost of $1,260,000 and a 7-year life. There would be no salvage value at the end of 7 years. Annual net operating income (ignoring taxes) would be as shown in the below table: Sales $2,000,000 Variable expenses $1,350,000 Contribution margin $650,000 Fixed Cash expenses $300,000 Depreciation $180,000 Net operating income $170,000 The company's required rate of return is 11%. Given the above details a) What is the project's payback period? b) What is the project's simple rate of return
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