A project will require a $125,000 investment today and produce the after-tax cash flows (and only the cash flows) listed below. What is the net present value of this investment if you require an 11% return? Would there be any potential issues in this case with using the internal rate of return in your analysis?

Explain your answer.

Year

After-tax Net

Cash Flow

Year 1 - $40,000

Year 2 - $50,000

Year 3 - (-$30,000)

Year 4 - $60,000

Year 5 - $75,000