accounting :

1. By outbidding its competitors, SOHIM, a contractor, received a contract worth $8,700,000 to build seismic simulators for KICT (Korean Institute of Civil Engineering and Building Technology) earthquake impact study over two years. With some contracts, KICT makes an advance payment when the contract is signed, but in this case, KICT will make two progressive payments: $5,600,000 at the end of the first year and the $3,100,000 balance at the end of the second year. The expected cash outflows required to produce the simulators are estimated to be $2,000,000 now, $3,300,000 during the first year, and $3,210,000 during the second year. In normal situations, SOHIM would not even consider a marginal project such as this one. However, hoping that the company can establish itself as a technology leader in the field, management felt that it was worth outbidding its competitors. Financially, what is the economic worth of outbidding the competitors for this project? (a) Determine whether this project is or is not a mixed investment. (b) Compute the IRR for this investment. Assume MARR = 10%. (c) Should SOHIM accept the project