Yanik Company is considering investing in a project that will cost $162,000 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 $45,000 each year. The company has a hurdle or cutoff rate of return of 8% and uses the following compound interest table:
Instructions
Using the internal rate of return method, determine if this project is acceptable by calculating an approximate interest yield for the project.

Question

Yanik Company is considering investing in a project that will cost $162,000 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 $45,000 each year. The company has a hurdle or cutoff rate of return of 8% and uses the following compound interest table:  
Instructions
Using the internal rate of return method, determine if this project is acceptable by calculating an approximate interest yield for the project.

Quizplus · Accepted Answer

The Answer of Yanik Company is considering investing in a project that will cost $162,000 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 $45,000 each year. The company has a hurdle or cutoff rate of return of 8% and uses the following compound interest table:  
Instructions
Using the internal rate of return method, determine if this project is acceptable by calculating an approximate interest yield for the project.

Yanik Company Is Considering Investing in a Project That Will