Quintiles Corporation is considering a project that would require an investment of $343,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Assume a tax rate of 25% and that all sales are cash sales and all expenses are paid as incurred): Sales................................. $227,000 Variable expenses......... 52,000 Contribution margin....... 175,000 Fixed expenses: Salaries......................... 27,000 Rents.............................. 41,000 Depreciation................ 42,875 Total fixed expenses..... 110,875 Net operating income.... $ 64,125 The payback period of the project is closest to: Select one: a. 4.28 years b. 5.35 years c. 3.77 years d. 7.13 years e. 4.94 years
Quintiles Corporation is considering a project that would require an investment of $343,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Assume a tax rate of 25% and that all sales are cash sales and all expenses are paid as incurred):
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|
Sales................................. |
$227,000 |
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|
Variable expenses......... |
52,000 |
|
|
Contribution margin....... |
175,000 |
|
|
Fixed expenses: |
|
|
|
Salaries......................... |
27,000 |
|
|
Rents.............................. |
41,000 |
|
|
Depreciation................ |
42,875 |
|
|
Total fixed expenses..... |
110,875 |
|
|
Net operating income.... |
$ 64,125 |
The payback period of the project is closest to:
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