Vaughn Company is considering a long-term investment project called ZIP ZIP will require an investment of $122,000. It will have auseful life of 4 years and no salvage value. Annual revenues would increase by $79,430, and annual expenses (excluding depreciation)would increase by $41,000. Vaughn uses the straight-line method to compute depreciation expense. The company's required rate ofreturn is 10%.Compute the annual rate of return.Annual rate of returnDetermine whether the project is acceptable?the project.%

The annual rate of return, which is typically expressed as a percentage, is a metric used to assess…

Answered: fe of 4 years and no salvage value.…

fe of 4 years and no salvage value. Annual revenues would incre mcrease by $41,000. Vaughn uses the straight-line method to com s 10%. te the annual rate of return. l rate of return %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Vaughn Company is considering a long-term investment project called ZIP ZIP will require an investment of $122,000. It will have a
useful life of 4 years and no salvage value. Annual revenues would increase by $79,430, and annual expenses (excluding depreciation)
would increase by $41,000. Vaughn uses the straight-line method to compute depreciation expense. The company's required rate of
return is 10%.
Compute the annual rate of return.
Annual rate of return
Determine whether the project is acceptable?
the project.
%

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