10.10. Grand Banks Mining Inc. plans a project to strip mine a wilderness area. Setting up operations and initial digging will cost $5 million. The first year's operations are expected to be slow and net a positive cash flow of only $500,000. Then there will be four years of $2 million cash flows after which the oil will run out. Closing the mine and restoring the environment in the sixth year will cost $1 million.

a. Calculate the project's NPV at a cost of capital of 12%.

b. Calculate the project's IRR to the nearest whole percent.