Barkley Inc. stock and the Market provided the following returns over the past 5 years

 

Year      Barkley        Market

2015       -5%                    -3%

2016        21                       10

2017        9                         4

2018         23                     11

2019         31                     15

Barkley finances his projects only with retained earnings and uses the CAPM with historical beta to determine his cost of equity. The risk-free rate on Treasury securities is 7 percent, and the market risk premium is 5 percent. Barkley is considering a project that has an initial cost, t=o, of $2,000 and is expected to provide cash flows of $1,000 per year for 3 years.

 

Determine:  el IRR