Jasper Ski Corp. is studying the feasibility of installing a new chair lift to expand the capacity of its downhill-skiing operation. Site preparation would require the expenditure of $900,000 at the beginning of the first year. Construction would take place early in the second year at a cost of $3.8 million. The lift would have a useful life of 12 years and a residual value of $800,000. The increased capacity should generate increased annual profits of $600,000 at the end of Years 2 to 5 inclusive and $1 million in Years 6 to 13 inclusive. Determine the IRR of the project. Should the expansion be undertaken, given Jasper Ski Corp's required return of 14%?

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The Answer of Jasper Ski Corp. is studying the feasibility of installing a new chair lift to expand the capacity of its downhill-skiing operation. Site preparation would require the expenditure of $900,000 at the beginning of the first year. Construction would take place early in the second year at a cost of $3.8 million. The lift would have a useful life of 12 years and a residual value of $800,000. The increased capacity should generate increased annual profits of $600,000 at the end of Years 2 to 5 inclusive and $1 million in Years 6 to 13 inclusive. Determine the IRR of the project. Should the expansion be undertaken, given Jasper Ski Corp's required return of 14%?