What is the IRR for the following project

What is the IRR for the following project

21) What is the IRR for the following project if its initial after tax cost is $5,000,000 and it is expected to

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provide after-tax operating cash inflows of $1,800,000 in year 1, $1,900,000 in year 2, $1,700,000 in

year 3 and $1,300,000 in year 4?

A) 13.57%. B) 15.57%.

C) 0.00%. D) None of the above.

ESSAY. Write your answer in the space provided or on a separate sheet of paper.

22) Tangshan Mining Company is considering investing in a new mining project. The firm’s cost of capital is 12 percent and the project is expected to have an initial after tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in year 1, $2,300,000 in year 2, $2,200,000 in year 3 and ($1,300,000) in year 4?

(a) Calculate the project’s NPV.

(b) Calculate the project’s IRR.

(c) Should the firm make the investment?

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