What is the payback time in years for proposed investment

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Reference no: EM131957882

A beverage company is investing in equipment at a cost of $39,000 for an entirely new production line to meet expected demand for a new product that has been proposed. They expect that this will increase annual sales by $79,000.

There are multiple annual variable costs that are also associated with the new line and equipment:

Cost of ingredients: $45,000

Salaries Expense: $13,200

Maintenance: $2,000

Annual Depreciation Expense: $4,900

What is the payback time in years for the proposed investment? Round to two decimal places.

Reference no: EM131957882

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