Solution-Te project would provide net operating income each

Te project would provide net operating income each year

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Reference no: EM13567132

Harrison Company is studying a project that would have an eight-year life and would require a $300,000 investment in equipment which has no salvage value. The project would provide net operating income each year as follows for the life of the project:

Sales		187,500
Less cash variable expenses		$112,500
Contribution margin		187,500
Less fixed expenses:
Fixed cash expenses	$150,000
Depreciation expenses	37,500	187,500
Net operating income		$112,500

The company"s required rate of return is 10%. What is the payback period for this project?

A) 3 years

B) 2 years

C) 2.5 years

D) 2.67 years

Reference no: EM13567132

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Te project would provide net operating income each year

Reference no: EM13567132

Reference no: EM13567132

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