The capital budgeting director of Sparrow Corporation is evaluating a

The capital budgeting director of Sparrow Corporation is evaluating a project which costs $200,000, is expected to last for 10 years and produce after-tax cash flows, including depreciation, of $44,503 per year.

If the firm’s cost of capital is 14% and its tax rate is 40%, what is the projected IRR?
A) 8%
B) 14%
C) 18%
D) -5%
E) 12%

ANSWER

C