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(Ignore income taxes in this problem.) Neighbors Corporation is considering a project that would require an investment of $329,000 and would last for 8 years.
(Ignore income taxes in this problem.) Neighbors Corporation is considering a project that would require an investment of $329,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows: |
Sales | $215,000 |
Variable expenses | 28,000 |
Contribution margin | 187,000 |
Fixed expenses: | |
Salaries | 35,000 |
Rents | 48,000 |
Depreciation | 43,000 |
Total fixed expenses | 126,000 |
Net operating income | $61,000 |
The scrap value of the project's assets at the end of the project would be $25,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: |
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