FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
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Transcribed Image Text:Sheridan Company is considering a long-term investment project called ZIP. ZIP will require an investment of $123,200.
It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $79.240, and annual
expenses (excluding depreciation) would increase by $39,200. Sheridan uses the straight-line method to compute
depreciation expense. The company's required rate of return is 12%.
Compute the annual rate of return.
Annual rate of return
Determine whether the project is acceptable?
the project.
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