Question
International Construction Co. was performing a road show to raise capital for developing its next construction project, a new road connecting two small towns. The
International Construction Co. was performing a road show to raise capital for developing its next construction project, a new road connecting two small towns. The total cost of the project amounted to 1718 M (million). On the other hand, the following cashflows were expected on a yearly basis, at the end o every year, respectively: 472 M, 501 M, 584 M, 617 M, 702 M, 781 M. Given the risk of the project, the consensus among the prospective investors attending the road show was that the project should yield a minimum 20% return, annually. According to this, Is the project worth undertaking it? What is the internal Rate of Return, IRR, of the project?
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