Olinick Corporation is considering a project that would require an investment of $349,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.): Sales $220,000 Variable expenses 21,000 Contribution margin 199,000 Fixed expenses: Salaries 39,000 Rents 52,000 47,000 Depreciation Total fixed expenses 138,000 Net operating income $ 61,000 The scrap value of the project's assets at the end of the project would be $29,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.)

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Olinick Corporation is considering a project that would require an investment of $349,000 and would last for 8 years. The incremental annual revenues and
expenses generated by the project during those 8 years would be as follows (Ignore income taxes.):
Sales
$220,000
Variable expenses
21,000
Contribution margin
199,000
Fixed expenses:
Salaries
39,000
Rents
52,000
Depreciation
Total fixed expenses
47,000
138,000
Net operating income
$ 61,000
The scrap value of the project's assets at the end of the project would be $29,000. The cash inflows occur evenly throughout the year. The payback period of the
project is closest to: (Round your answer to 1 decimal place.)
Transcribed Image Text:Olinick Corporation is considering a project that would require an investment of $349,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.): Sales $220,000 Variable expenses 21,000 Contribution margin 199,000 Fixed expenses: Salaries 39,000 Rents 52,000 Depreciation Total fixed expenses 47,000 138,000 Net operating income $ 61,000 The scrap value of the project's assets at the end of the project would be $29,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.)
The scrap value of the project's assets at the end of the project would be $29,000. The cash inflows occur evenly throughout the year. The payback period of the
project is closest to: (Round your answer to 1 decimal place.)
Multiple Cholce
3.2 years
5.7 years
4.0 years
2.9 years
Transcribed Image Text:The scrap value of the project's assets at the end of the project would be $29,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.) Multiple Cholce 3.2 years 5.7 years 4.0 years 2.9 years
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