How do you calculate the IRR of a project where you are given 2 different inflation rates and the real and nominal cash flows. For example:

A project cost $50,000. The estimated nominal net cash flows are:

Year 1- $20,000

Year 2- $30,000

Year 3 - $20,000

The real cost of capital is 10% p.a. The expected inflation is 5% p.a for the first year whichis expected to increase to 7% for the following 2 years.

How do you set up an equation to calculate IRR.....Can you just use the real cash flows as the cash flows as they would already take into account the Inflation changes?

Thanks