Oceanview Manufacturing is considering an investment that would require an initial net

investment of $625,000. The following revenues/expenses relate exclusively to the investment:

Sales $360,000

Variable expenses $30,000

Contribution margin $330,000

Fixed expenses

Salaries expense $24,000

Rent expense $50,000

Depreciation expense $50,000

Total fixed expenses $124,000

Operating income $206,000

The investment will have a residual value of $40,000 at the end of its 18 year useful life.

The payback period for this investment is _______? If the desired payback is 3 years would they

accept or reject this investment?

A) 2.70 years and accept.

B) 1.92 years and reject

C) 3.35 years and reject

D) 2.18 years and accept