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The capital budgeting director of Sparrow Corporation is eva

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The capital budgeting director of Sparrow Corporation is evaluating a project which costs $200,000, is expected to last for 10 years and produce net after-tax cash flows of $44,503 per year. If the firm's cost of capital is 14 percent, what is the project's IRR? (Hint: Is the firm's cost of capital relevant to an IRR calculation?)

a. 8%
b. 14%
c. 18%
d. -5%
e. 12%

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The solution provides detailed calculations and explanations using Excel spreadsheet.

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