Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $20.000 and will have a 6-year useful life and a $4,900 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,900 per year. The cost of these prescriptions to the pharmacy will be about $26,800 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 3.3 years 25 years 41 years

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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12q-3
Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $20.000 and will have a 6-year useful life and a $4,900 salvage value. Delivering
prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,900 per year. The cost of these prescriptions to the pharmacy will be about
$26,800 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.): (Round your answer to 1 decimal
place.)
Multiple Choice
3.3 years
25 years
41 years
4.4 years
Transcribed Image Text:Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $20.000 and will have a 6-year useful life and a $4,900 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $32,900 per year. The cost of these prescriptions to the pharmacy will be about $26,800 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to (Ignore income taxes.): (Round your answer to 1 decimal place.) Multiple Choice 3.3 years 25 years 41 years 4.4 years
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