Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Amani Company is studying a project that would have a ten-year life and would require a $480,000 investment in equipment that has no salvage
Amani Company is studying a project that would have a ten-year life and would require a $480,000 investment in equipment that has no salvage value. The project would provide net income each year as follows for the life of the project: Sales $500,000 Less cash variable expense $280,000 Contribution margin $220,000 Less fixed expenses: Fixed cash expenses $150,000 Depreciation expenses $40,000 $190,000 Net income $30,000 The company's required rate of return is 12%. What is the payback period for this project? (Ignore income taxes in this problem and round your final answer to 2 decimal places.) 6.86 years. 3.00 years. 4.28 years. 9.00 years.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started