Your company is planning to open a new gold mine which will cost $3 million to build,with the expenditure occurring at the end of the year three years from today.The mine will bring year-end after-tax cash inflows of $2 million at the end of the two succeeding years,and then it will cost $.5 million to close down the mine at the end of the 3rd year of operation.What is the project's IRR?
A) 14.36%
B) 10.17%
C) 17.42%
D) 12.70%
E) 21.53%

Question

Quizplus · Accepted Answer

Using a financial calculator: IRR = CF0 = -3,000,000, C01 = 2,000,000, F01 = 2, C02 = -500,000 F02 = 1, IRR CPT = 12.70%

Your Company Is Planning to Open a New Gold Mine