What is the irr of this project

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Question - Sooner Corp. has been a very profitable company for many years. Currently, they are considering investing in a new project that will last three years. The project will require an immediate capital expenditure of $600,000 which will be fully expensed this year. Sooner estimates that the revenues from this project will be $500,000 during the first year and that the revenues will grow at a rate of 25 percent per year. Variable costs are expected to be 50 percent of revenues each year, and fixed costs are expected to be $15,000 per year. A one-time net working capital investment of $30,000 is required immediately and will be recovered at the end of the project's life. Sooner's marginal tax rate is 21 percent. What is the IRR of this project?

Reference no: EM133179212

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