(Ignore income taxes in this problem.) Czaplinski Corporation is considering a project that would require an investment of $873,000 and would last for 5 years. The incremental annual revenues and expenses generated by the project during those 5 years would be as follows:
| Sales | $235,000 |
| Variable expenses |
31,500 |
| Contribution margin |
203,500 |
| Fixed expenses: | |
| Salaries | 30,500 |
| Rents | 22,000 |
| Depreciation |
87,000 |
| Total fixed expenses |
139,500 |
| Net operating income |
$64,000 |
The scrap value of the project’s assets at the end of the project would be $44,000. The payback period of the project is closest to:
| 5.8 years | |
| 13.6 years | |
| 13.0 years | |
| 6.7 years |