Olinick Corporation is considering a project that would require an investment of $324,000 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	$	200,000
Variable expenses		27,000
Contribution margin		173,000
Fixed expenses:
Salaries		34,000
Rents		47,000
Depreciation		42,000
Total fixed expenses		123,000
Net operating income	$	50,000

The scrap value of the project's assets at the end of the project would be $24,000. The cash inflows occur evenly throughout the year. The payback period of the project is closest to: (Round your answer to 1 decimal place.)

Garrison_16e_Rechecks_2019_10_12

Multiple Choice

• 3.5 years

• 6.5 years

• 5.0 years

• 3.1 years