The Freeman Corporation is a medical software company that specializes in assisting healthcare facilities to convert from paper based medical records to cloud storage. Because of increased fear of cyber$-$attacks, the demand for their services has been extremely high, which has resulted in the need to upgrade their computer hardware and software. Freeman will be evaluating the project over a five$-$year period.

Based on the research, the following estimates were generated.

Cost of the new hardware and software: $$600,000$

Revenues: $$250,000$ for the first year and increase $$30,000$ per year for the five$-$year evaluation period.

The hardware and software will be depreciated straight line over a five$-$year period with no salvage value.

Variable costs are expected to be $45\%$ of revenues.

Rodriguez's tax rate is $24\%.$

Prior to the upgrade, working capital in the amount of $$50,000$ will be invested into inventory of parts and other supplies to keep the software operational. Working capital needs will decrease by $$10,000$ each year until all working capital has been recovered.

Freeman's cost of capital is estimated to be $8\%$ for this project.

What is the IRR for this project?

$8\mathrm{.}72\%$

$9\mathrm{.}10\%$

$8\mathrm{.}49\%$

None of these answers are correct