Your company is planning to open a new gold mine which will cost $3 mi

Your company is planning to open a new gold mine which will cost $3 million to build, with the expenditure occurring at the end of the year three years from today.

The mine will bring year-end after-tax cash inflows of $2 million at the end of the two succeeding years, and then it will cost $.5 million to close down the mine at the end of the 3rd year of operation. What is the project’s IRR?
A) 14.36%
B) 10.17%
C) 17.42%
D) 12.70%
E) 21.53%

ANSWER

D