$300,000 Initial Investment, expected life = 8 yrs, salvage value = $20,000, revenues and expenses are given below:
1) Payback Period \textit{(remember to disclude non-cash depreciation expense)}?, is this within the required limit of 5 years?
2) Simple Rate of Return? is this within the required 12%?
Given:
Revenues
Initial Investment: 300,000
$ 200,000
Less operating expenses:
Commissions to amusement houses
$ 100,000
Insurance
7,000
Depreciation
35,000
Maintenance
18,000
160,000
Net operating income
$
40,000
1) Payback Period:
Acceptable?
2) Simple Rate of Return:
Acceptable?
On Own