Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. Determine the necessary average annual income
(using straight-line depreciation) that must be achieved on this project for it to be acceptable to Jimmy Co.

Question

Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. Determine the necessary average annual income 
(using straight-line depreciation) that must be achieved on this project for it to be acceptable to Jimmy Co.

Quizplus · Accepted Answer

The Answer of Jimmy Co. is considering a 12-year project that is estimated to cost $1,050,000 and has no residual value. Jimmy Co. seeks to earn an average rate of return of 18% on all capital projects. Determine the necessary average annual income 
(using straight-line depreciation) that must be achieved on this project for it to be acceptable to Jimmy Co.

Jimmy Co Is Considering a 12-Year Project That Is Estimated to to Cost