Olinick Corporation is considering a project that would require an investment of $338,000 and would last for 8 years. The incremental annual revenues and expenses generated by the project during those 8 years would be as follows (Ignore income taxes.):

Sales	$	269,000
Variable expenses		20,000
Contribution margin		249,000
Fixed expenses:
Salaries		28,000
Rents		41,000
Depreciation		36,000
Total fixed expenses		105,000
Net operating income	$	144,000

The scrap value of the project's assets at the end of the project would be $18,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to:

Answer rating: 100% (QA)

To calculate the payback period we need to determine the time it takes for the projects cumulative c... View the full answer