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Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $20,000 and will have a 6-year useful life and a

Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $20,000 and will have a 6-year useful life and a $5,900 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $33,900 per year. The cost of these prescriptions to the pharmacy will be about $28,800 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.)

Multiple Choice

  • 3.9 years

  • 2.8 years

  • 5.1 years

  • 5.6 years

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