Information for Sierra Company is given in D13-10. In addition, the companys required rate of return is

Question:

Information for Sierra Company is given in D13-10. In addition, the company’s required rate of return is 12%.

Instructions
(a) Calculate the net present value on this project and discuss whether it should be accepted.
(b) Calculate the internal rate of return on this project and discuss whether it should be accepted.

Data From D13-10:

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 four years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would increase by $41,000.

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Related Book For  book-img-for-question

Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118856994

4th Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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