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Cullumber Company is consider 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. Cullumber uses the straight-line method to compute depreciation expense. The company's required rate of return is 22% Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project

Cullumber Company is consider 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. Cullumber uses the straight-line method to compute depreciation expense. The company's required rate of return is 22% Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Cullumber Company is considering a long-term investment project called ZIP. ZIP will require an investment of $104,000. 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. Cullumber uses the straight-line method to compute depreciation expense. The company's required rate of return is 22%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project. %
Transcribed Image Text:Cullumber Company is considering a long-term investment project called ZIP. ZIP will require an investment of $104,000. 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. Cullumber uses the straight-line method to compute depreciation expense. The company's required rate of return is 22%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? the project. %
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