Question: Sierra Company is considering a long term investment project called ZIP 132081
Sierra Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $80,000, and annual cash outflows would increase by $41,000. The company’s required rate of return is 12%. Calculate the internal rate of return on this project and discuss whether it should be accepted.
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