Question 26: (2 points)
(Ignore income taxes in this problem.) Olinick Corporation is considering a project that would require an investment of $243,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 10 years would be as follows:
Variable expenses 49,000
Contribution margin 223,000
Total fixed expenses 88,000
Net operating income $135,000
The scrap value of the project's assets at the end of the project would be $20,000. The payback period (by using Payback Method) of the project is closest to:
This solution shows how to determine the payback period with the formula and simple calculations.