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Cardinal Company is considering a project that would require a $2,985,000 investment in equipment with a useful life of five years. At the end of
Cardinal Company is considering a project that would require a $2,985,000 investment in equipment with a useful life of five years. At the end of five years, the project would terminate and the equipment would be sold for its salvage value of $400,000. The companys discount rate is 16%. The project would provide net operating income each year as follows: |
Sales | $ | 2,737,000 | ||
Variable expenses | 1,001,000 | |||
Contribution margin | 1,736,000 | |||
Fixed expenses: | ||||
Advertising, salaries, and other fixed out-of-pocket costs | $ | 610,000 | ||
Depreciation | 517,000 | |||
Total fixed expenses | 1,127,000 | |||
Net operating income | $ | 609,000 | ||
Required: |
What is the projects payback period? (Round your answer to 2 decimal places.) |
Projects payback period
Can't get it to come out......help me! | years
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