48

Crane 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 $79,500, and annual expenses (excluding depreciation) would increase by $43,500. Crane uses the straight-line method to compute depreciation expense. The company's required rate of return is 7%. Compute the annual rate of return. Annual rate of return % Determine whether the project is acceptable? the project