What would be the payback period of the project

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Question - Neighbors Corporation is considering a project that would require an investment of $279,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows:

Sales: $224,000

Variable Expenses: $22,000

Contribution margin: $202,000

Fixed Expenses:

Salaries: $25,000

Rents: $38,000

Depreciation: $33,000

Total Fixed Expenses: $96,000

Net Operating Income: 106,000

The scrap value of the project's assets at the end of the project would be $15,000. The cash inflows occur evenly throughout the year. What would be the payback period of the project?

Reference no: EM132788228

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