Project NPV and IRR $($S$6\mathrm{.}2,$ S$6\mathrm{.}3)$ A project requires an initial investment of $$100,000$ and is expected to produce a cash inflow before tax of $$26,000$ per year for five years. Company A has substantial accumulated tax losses and is unlikely to pay taxes in the foreseeable future. Company B pays corporate taxes at a rate of $21\%$ and can claim $100\%$ bonus depreciation on the investment. Suppose the opportunity cost of capital is $8\%.$ Ignore inflation.

a$.$ Calculate project NPV for each company.

b$.$ What is the IRR of the after$-$tax cash flows for each company? Why are the IRRs for A and B the same?