Question
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 $4,900 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,900 per year. The cost of these prescriptions to the pharmacy will be about $26,800 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.):
3.3 years
2.5 years
4.1 years
4.4 years
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