Jesse purchased a franchise agreement to distribute electronic gadgets for 7 years. The agreement cost $2,200,000 and she had to make investments of $825,000 for the first 2 years to set up her showroom. The franchise generated $1,000,000 in profits each year from the 1st year to 7 years afterwards. At the end of year 7, she sold the furniture in her showroom for $95,000.

a. What is the Internal Rate of Return (IRR)?

b. Should she have proceeded with this plan if her cost of capital was 15%?