1. How to calculate the internal rate of return for the proposed investment?

2. What profit before tax in year 5 would increase the internal rate of return to 35%?

1 Unit sales, first year 2 Unit price, first year 3 Unit manufacturing cost 4 Yearly sales growth 5 Yearly price fall 6 Yearly decline in manufacturing costs 7 Marketing expense as a % of revenue 8 Yearly fixed cost 9 Initial investment 10 1,600 $1,800 $1,000 100% 15% 6% 14% $1,000,000 410,226 Year 1 Year 2 Year 3 Year 4 Year 5 12 Unit sales 13 Unit price 14 Revenue 15 Unit manufacturing cost (regular) 16 Total manufacturing cost 17 Marketing expense 18 Profit before tax 1,600 3,200 6,400 12,800 25,600 939.61 $2,880,000.00 $4,896,000.00 $8,323,200.00 $14,149,440.00 $24,054,048.00 780.75 $2,600,000.00 $4,008,000.00 $6,655,040.00 $11,631,475.20 $ 20,987,173.38 $ 403,200.00 685,440.00 $1,165,248.00 1,980,921.60 3,367,566.72 (123,200.00)$202,560.00 $ 502,912.00$ 57,043.20 $ (300,692.10 $1,800.00$1,530.001,300.50$ 1,105.43$ $1,000.00 940.00 883.60 830.58 $