What is the irr for the investment

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Problem 1: Nagini, a financial analyst with Telord Ltd., has been asked to determine the internal rate of return (IRR) for a proposal the company is considering. The company is a contract packaging manufacturer for a variety of customers. A potential new customer approached the company about a new five-year contract. Based on the customer's requirements, Telord will have to upgrade its current machines at a cost of $528,000. If the proposal is accepted, Telord will have additional annual revenues of $380,000 for each of the next five years. Cost of goods sold is 34% of sales. The company pays income tax at 28%. Ignoring CCA and salvage, what is the IRR for this investment?

a) -12.22%
b) -4.08%
c) 21.03%
d) 38.01%

 

Reference no: EM132889021

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