Belk’s Pizza has purchased a small auto in order to offer delivery to customers. The auto cost $18,000 and is expected to be used for six years. Having pizza delivery is expected to increase revenues by approximately $4,000 each year. The auto will be depreciated straight-line over three years.

Required:
a. Compute the payback period on the new auto.
b. List three non-financial considerations that Belk may have addressed in making the decision to purchase the new auto.

Question

Required:
a.	 Compute the payback period on the new auto.
b.	List three non-financial considerations that Belk may have addressed in making the decision to purchase the new auto.

Quizplus · Accepted Answer

The Answer of Belk’s Pizza has purchased a small auto in order to offer delivery to customers.  The auto cost $18,000 and is expected to be used for six years.  Having pizza delivery is expected to increase revenues by approximately $4,000 each year.  The auto will be depreciated straight-line over three years.

Required:
a.	 Compute the payback period on the new auto.
b.	List three non-financial considerations that Belk may have addressed in making the decision to purchase the new auto.

Belk’s Pizza Has Purchased a Small Auto in Order to Offer