Ivanhoe Company is considering a long-term investment project called ZIP. ZIP will require an investment of $124,000. It will have a useful life of 4 years and no salvage value. Annual revenues would increase by $81,200, and annual expenses (excluding depreciation) would increase by $40,900. Ivanhoe uses the straight-line method to compute depreciation expense. The companys required rate of return is 12%.

Calculate annual rate of return, and if the project is acceptable