A natural resource development and extraction project would require an investment of $1 million now and $1 million at the end of each of the next four years. Then it would generate annual profits of $2 million in each of the following four years. There would be no residual value. What would be the IRR of the project? Would it be acceptable to a company requiring a 12% return on investment?

Question

Quizplus · Accepted Answer

The Answer of A natural resource development and extraction project would require an investment of $1 million now and $1 million at the end of each of the next four years. Then it would generate annual profits of $2 million in each of the following four years. There would be no residual value. What would be the IRR of the project? Would it be acceptable to a company requiring a 12% return on investment?

A Natural Resource Development and Extraction Project Would Require an Investment