Haleys Hair Salon is considering opening a new location in Pompador, California. The cost of building a

Question:

Haley’s Hair Salon is considering opening a new location in Pompador, California. The cost of building a new salon is $300,000. A new salon will normally generate annual revenues of $70,000, with annual expenses (including depreciation) of $40,000.
At the end of 15 years the salon will have a of $75,000.

Instructions
Calculate the annual rate of return on the project.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...