Question
(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $21,000 and will have
(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $21,000 and will have a 6-year useful life and a $6,000 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $34,000 per year. The cost of these prescriptions to the pharmacy will be about $29,000 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to: |
4.2 years
3 years
5.4 years
5.8 years
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