XYZ Corporation is considering the

XYZ Corporation is considering the introduction of a new product.

XYZ Corporation is considering the introduction of a new product.
The project will last five years and then be terminated.
The company’s marginal tax rate is 32%.
The company’s cost of capital is 18%.
The cost of the new plant and equipment for the project is $6,000,000.
Shipping and Installation costs are $100,000.
Projected sales are:
Year Units Sold
1 60,000
2 110,000
3 130,000
4 90,000
5 80,000
Sales price per unit:
$125 per unit in years 1-3
$110 per unit in years 4
$90 per unit in year 5
Variable cost per unit: $75 per unit.
Annual fixed costs: $225,000.
Initial Working Capital Required is $250,000 to start the project.
For each year, the total investment in net working capital will be equal to 10% of sales. All working capital is liquidated at the termination of the project at the end of year 5.
Depreciation method: Use simplified straight-line depreciation over five years. It is assumed the plant and equipment will have no salvage value at the end of the project.

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Based on the above information, answer the following question:

What is the Internal Rate of Return of the project?