X Company is considering producing and selling a new product. After conducting a market research study that cost $4,400, company estimates are that sales of the product will be 8,500 units in each of the next four years, contribution margin per unit will be $5.90, and annual fixed costs will be $17,866.

In order to produce the new product, additional equipment would have to be purchased, costing $120,000, with no salvage value at the end of four years.

What is the internal rate of return of producing and selling this new product? [Use the present value tables in the Coursepack.]

A: 0.03

B: 0.04

C: 0.05

D: 0.06

E: 0.07

F: 0.08