Question
Butler Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $42,000 and will have a 7-year useful life with
Butler Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $42,000 and will have a 7-year useful life with no salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $36,227 per year. The cost of these prescriptions to the pharmacy will be about $26,000 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to: (Round your answer to 1 decimal place.) 4.1 years 5.8 years 4.8 years 5.1 years 42,000-4.1 70227 - 36,227 26,000 10,227 The simple rate of return on the prescription delivery project is closest to: 12% 13% 10% 8% Straight line depreciation = Purchase Salvage cost - volve useful life assum
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