Question: Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4

Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $80,000, and annual expenses (excluding depreciation) would increase by $41,000. Sierra uses the straight-line method to compute depreciation expense. The company’s required rate of return is 12%. Compute the annual rate of return.

Step by Step Solution

★★★★★

3.42 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Revenues 80000 Less Expenses excluding depreciation41000 Depreciati... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

144-B-A-I (1977).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Consider the following facts and identify those that would be necessary to (1) disclose or (2) include in an antenuptial agreement. 1 Mac is a widower who has three adult children. All the children...

The management of Biggs Company is considering a proposal to install a third production department within its existing factory building. With the companys present production setup, 200,000 pounds per...

The Super Muench Cookie Company is considering a diversification effort that would move it into small retail outlets at major malls around the country. Currently, Super Muench has a capital structure...

The Super Muench Cookie Company is considering a diversification effort that would move it into small outlets at major malls around the country. Currently, Super Muench has a capital structure...

Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $130,000. It will have a useful life of four years and no salvage value. Annual cash inflows...

Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $128,000. It will have a useful life of four years and no salvage value. Annual cash inflows...

FULL SCREEN PRINTER VERSION BACK Your answer is partially correct. Try again. Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $131,000. It...

FIER VERSTOM 4 BLACK RCES TER NEXT 0 Do In Review 13.11 Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $132,000. It will have a useful life...

Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $121,200. It will have a useful life of 4 years and no salvage value. Annual revenues would...

FULL SCREEN PRINTER VERSION BACK Do It! Review 13.11 Your answer is partially correct. Try again. Sierra Company is considering a long-term investment project called ZIP, ZIP will require an...

In a one-way ANOVA, there are three independent samples, with n1 = 8, n2 = 10, and n3 = 7. The calculated F-statistic is F = 3.95. At the 0.05 level of significance, what conclusion would be reached?...

Today, eBay offers products in two ways: through auctions and through set prices. Comment on this approach.

16.105 Determine the Fourier series of the sawtooth waveform in Fig. 17.9. f(t) im. -2 -1 0 1 2 3 t

[5] A marksman is firing a pistol at a 5 cm diameter, circular bullseye some distance away. The center of the target is considered (0, 0). This marksman pulls a little to the right (positive x) and a...

Suppose you are a euro-based Italian Investor, and you are Investing 11,200 to buy shares of a British company at 50 per share. The exchange rate is 1.40 per pound. The stock pays a 1 dividend one...

Your 21-year old cousin is graduating from college and has already accepted her first full-time job offer. She will be earning $3,000 per month. She already has an apartment and her fixed monthly...

Turn this orthographic drawing to isometric? 75 9.5 4.5 PLAN VIEW FRONT VIEVW RIGHT ELEVATION VIEW Figure I SS SZ SZT

A job shop consists of 6 different machines and 4 different jobs are to be processed through these machines. The job interarrival time follows Exp(15) mins. Each job is processed on a series of...

Graphs in the news II Find a pie chart of categorical data from a newspaper, a magazine, or the Internet. a) Is the graph clearly labeled? b) Does it violate the area principle? c) Does the...

In what ways can the budgeting process create incentives for unethical behavior?

Karen Fritz is studying for the next accounting mid-term examination. Summarize for Karen what she should know about management functions.

Decision making is managements most important function. Do you agree? Why or why not?

Last year a company had $355,000 of assets, $26,275 of net income, and a debt-to-total-assets ratio of 44%. Now suppose the newly hired CFO convinces the president to increase the debt ratio to 58%....

Part A: Match the correct term to each of the following descriptions. A term may be used more than once or not at all. Descriptions: The number of standard deviations that a value lies from the mean...

The Crane Products Co.currently has debt with a market value of $275 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years...