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Unformatted text preview: coffee vending machines in one of its stores. The company estimates that incremental annual revenues and expenses associated with the espresso bar would be: Sales $100,000 Less variable expenses 30,000 Contribution margin 70,000 Less fixed expenses: Insurance $ 9,000 Salaries 26,000 Depreciation 15,000 50,000 Net operating income $ 20,000 Equipment for the espresso bar would cost $150,000 and have a 10-year life. The old vending machines could be sold now for a $10,000 salvage value. The company requires a payback of 5 years or less on all investments. What is the payback of the investment? Exercise 3: Refer to the data for Myers Company above. What is the simple rate of return on the espresso bar?...
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- Spring '10