Do It Review 26-4 Wayne Company is considering a long-term investment project ca

Question

Do It Review 26-4 Wayne Company is considering a long-term investment project called ZIP. ZIP will require an investment of $116,424. It will have a useful life of 4 years and no salvage value. Annual cash inflows would increase by $83,000, and annual cash outflows would increase by $43,400. The company's required rate of return is 12%. Click here to view PV table. Calculate the internal rate of return on this project. (Round answers to 0 decimal places, e.g. 15%.) Internal rate of return on this project is between | 96 and | Determine whether this project should be accepted? The project be accepted.

Explanation / Answer

IRR is between 13% and 14%

the project should be accepted

Cash flows Year        (116,424.00) 0            39,600.00 1            39,600.00 2            39,600.00 3            39,600.00 4

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