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
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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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