The Managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960's era. They expect to sell 250 engine blocks annually for the next 5 years. The necessary foundry and machining equipment will require an outlay of $800,000. This amount will be depreciated straight line to zero over the projects life. The firm expects to be able to dispose of the manufacturing equipment for $150,000 at the end of the project. Labor and material costs total $500 per block, fixed costs are $125,000 per year. Assume a 35% tax rate and a 12% discount rate.

Question 18: What is the IRR of the above project?

A.39.53%

B.31.12%

C.47.57%

D.51.28%

E.56.60%