Find the internal rate of return for the project

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A firm is analyzing the viability of a new product. Each year the product is expected to generate sales of $400, have variable costs of 20% of sales, and have fixed costs of $145. The equipment needed for production costs $480 and will be depreciated straight line to zero over the 4-year life of the project; its salvage value will be zero. The firm has other profitable opportunities sufficient to cover any losses. The tax rate is 40% and the cost capital is 15%. Find the internal rate of return for the project. State your answer using the form X% < IRR < (X + l)%. According to the internal rate of return method, should you accept or reject the project?

Reference no: EM131558504

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