Your Company Is Planning to Open a New Gold Mine

Multiple Choice

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 $0.5 million to close down the mine at the end of the third year of operation. What is this project's IRR?

A) 14.36%
B) 10.17%
C) 17.42%
D) 12.70%
E) 21.53%