Exercise 25-08 (Video)

Pierres Hair Salon is considering opening a new location in French Lick, 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 $41,500. At the end of 15 years the salon will have a salvage value of $80,000. Calculate the annual rate of return on the project.

Annual rate of return

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