Dow Chemical Inc.is considering investing in a project that will cost $152,000 and have no salvage value at the end of its 5-year life. It is estimated that the project will generate annual cash inflows of $40,000 each year. The company has a hurdle or cutoff rate of return of 9%.

Instructions

Using the internal rate of return method calculate an approximate interest yield for the project. (use tables from Appendix D)

Should this project be accepted by Dow Chemical and why?