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April 20, 2014

Homework Help: Accounting

Posted by Francesca on Sunday, July 15, 2012 at 6:33pm.

Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $121,200. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79,180, and annual expenses (excluding depreciation) would increase by $40,180. Sierra uses the straight-line method to compute depreciation expense. The company's required rate of return is 11%. Compute the annual rate of return.

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