Wallowa 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 companys required rate...

Estimated annual cash inflows 80000 Estimated annual cash outflows 400 ...

Wallowa Company is considering a long-term investment project called ZIP. ZIP will require an investment of $120,000.

Question:

Wallowa 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 . 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%. Calculate the on this project and discuss whether it should be accepted.

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...