Purchased a small auto for delivering prescriptions

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Reference no: EM131291967

(Ignore income taxes in this problem.) Buy-Rite Pharmacy has purchased a small auto for delivering prescriptions. The auto was purchased for $24,000 and will have a 6-year useful life and a $5,300 salvage value. Delivering prescriptions (which the pharmacy has never done before) should increase gross revenues by at least $33,300 per year. The cost of these prescriptions to the pharmacy will be about $27,600 per year. The pharmacy depreciates all assets using the straight-line method. The payback period for the auto is closest to:

4.2 years

3.3 years

5.1 years

4.8 years

Reference no: EM131291967

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