Chapter 7, End of Chapter, Problems,Exercise P 7-23

Please answer Part 1 = Calculate the payback period for each product.

Product A Product B

Initial Investment:

Cost of Equipment(zero salvage value) $170,000.00 $380,000.00

Annual Revenues and Cost:

Sales Revenues $250,000.00 $350,000.00

Variable Expenses $120,000.00 $170,000.00

Depreciation Expense $34,000.00 $76,000.00

Fixed Out-of-Pocket Operating Cost $70,000.00 $50,000.00