Question

Wayne 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 $40,000. The company’s required rate of return is 12%.
(a) Calculate the net present value on this project and discuss whether it should be accepted.
(b) Calculate the internal rate of return on this project and discuss whether it should be accepted.



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  • CreatedMarch 02, 2015
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