Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,800. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79,304, and annual expenses (excluding depreciation) would increase by $40,100. Wayne uses the straight-line method to compute depreciation expense. The company's required rate of return is 13%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? ✓the project. %
Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,800. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79,304, and annual expenses (excluding depreciation) would increase by $40,100. Wayne uses the straight-line method to compute depreciation expense. The company's required rate of return is 13%. Compute the annual rate of return. Annual rate of return Determine whether the project is acceptable? ✓the project. %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,800. It will have a
useful life of 4 years and no salvage value. Annual revenues would increase by $79,304, and annual expenses (excluding depreciation)
would increase by $40,100. Wayne uses the straight-line method to compute depreciation expense. The company's required rate of
return is 13%.
Compute the annual rate of return.
Annual rate of return
Determine whether the project is acceptable?
✓the project.
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1becd8c0-6409-4777-a3ed-b129ce4472d0%2Fb129fa5f-ae3e-4469-8463-c7b8f0c96e87%2Fuvan5xu_processed.png&w=3840&q=75)
Transcribed Image Text:Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $118,800. It will have a
useful life of 4 years and no salvage value. Annual revenues would increase by $79,304, and annual expenses (excluding depreciation)
would increase by $40,100. Wayne uses the straight-line method to compute depreciation expense. The company's required rate of
return is 13%.
Compute the annual rate of return.
Annual rate of return
Determine whether the project is acceptable?
✓the project.
%
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