Wallowa Company is considering a long-term investment project called ZIP

Wallowa Company is considering a long-term investment project called ZIP. ZIP will require an investment of $121,080. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79,460, and annual expenses (excluding depreciation) would increase by $40,590. Wallowa uses the straight-line method to compute depreciation expense. The company’s required rate of return is 11%.

Compute the annual rate of return. (Round answer to 0 decimal places, e.g. 15%.)

Here’s the SOLUTION

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