Question
Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,840. It will have a useful life of 4
Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,840. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79,300, and annual expenses (excluding depreciation) would increase by $40,100. Wayne uses the straight-line method to compute depreciation expense. The companys required rate of return is 13%. Compute the annual rate of return. (Round answer to 0 decimal places, e.g. 15%.)
Annual rate of return %
Determine whether the project is acceptable?
Accept Reject the project.
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