Below is a forecast of future cash flows for a new startup company. The year 10 cash flow ($10,000,000) represents an expected sale of the company. The forecast assumes all of the future cash flows will be received at the end of each year. Your client has an opportunity to invest in Petrie, Inc. They can buy 15.00% of the company for $1,500,000. Given the high risk for a startup company, the appropriate discount rate is deemed to be 22 .00% Required: Based upon the listed assumptions, what do you advise your client? Would your advice change if the cash flows are expected to be received evenly throughout the year? Would your advice change if your financial analysis suggests a lower discount rate of 20.00%? Calculate the IRR and explain how it is used in this analysis.

Expected cash flows: year 1 $1425000, year 2 $1800000, year 3 $1980000, year 4 $2178000, year 5 $2395800, year 6 $2635380, year 7 $2898918, year 8 $3188810, year 9 $3507691, year 10 $10000000