LCK Fish Farm, a local fish farm, is considering purchasing a new plot of land for their business for $600,000. The land would allow LCK to increase their pre-tax operating income (and cash flow) by $200,000 each year. The company would plan to keep the land for 25 years before selling it for $800,000. Because the land is real property, the company would not take any related depreciation. LCK's tax rate is 25%, and the required rate of return is 8%.
Determine LCK Fish Farm's internal rate of return (IRR) on the investment in the new plot of land.

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The Answer of LCK Fish Farm, a local fish farm, is considering purchasing a new plot of land for their business for $600,000. The land would allow LCK to increase their pre-tax operating income (and cash flow) by $200,000 each year. The company would plan to keep the land for 25 years before selling it for $800,000. Because the land is real property, the company would not take any related depreciation. LCK's tax rate is 25%, and the required rate of return is 8%.
Determine LCK Fish Farm's internal rate of return (IRR) on the investment in the new plot of land.

LCK Fish Farm, a Local Fish Farm, Is Considering Purchasing