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
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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