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Buxton Corporation is evaluating a capital investment project which would require an initial investment of $240,000 to purchase new machinery. The annual revenues and expenses
Buxton Corporation is evaluating a capital investment project which would require an initial investment of $240,000 to purchase new machinery. The annual revenues and expenses generated specifically by this project each year during the project's nine year life would be: Sales $185,000 Variable expenses $ 38,000 Contribution margin $147,000 Fixed expenses: Salaries expense $ 31,000 Rent expense $ 24,000 Depreciation expense $ 25,000 Total fixed expenses $ 80,000 Operating income $ 67,000 The residual value of the machinery at the end of the nine years would be $15,000. The payback period of this potential project in years would be closest to: 3.6 Oo oo
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