Wyer's Accounting Museum is exploring the purchase of a new building with a useful life of 15

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Wyer's Accounting Museum is exploring the purchase of a new building with a useful life of 15 years to use as its main gallery

space. The building will cost $850,000. Once it has been purchased, the museum will terminate its current lease, which costs $60,000 per year. The new gallery will allow the museum to display more of its permanent collection, as well as to showcase traveling exhibits. The increased exhibit space, along with the new building's location, is expected to increase admissions revenue by $25,000 per year.


Required

Calculate the payback period for the proposed investment in the building. Assume that all cash flows occur evenly throughout the year.


Payback Period
Payback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...
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Related Book For  answer-question

Managerial Accounting

ISBN: 978-1118338445

2nd edition

Authors: Charles E. Davis, Elizabeth Davis

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