Pharmacy depreciates all assets using straight-line method

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Reference no: EM131211037

(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $26,000 and will have a 6-year useful life and a $5,500 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $33,500 per year. The cost of these prescriptions to the pharmacy will be about $28,000 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to:

5.1 years

4.7 years

5.7 years

3.7 years

Reference no: EM131211037

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