You are considering investing in a new gold mine in South Africa. Gold in South Africa is buried very deep, so the mine will require an initial investment of $270 million. Once this investment is made, the mine is expected to produce revenues of $30 million per year for the next 20 years. It will cost $9.4 million per year to operate the mine. After 20 years, the gold will be depleted. The mine must then be stabilized on an ongoing basis, which will cost $4.9 million per year in perpetuity. Calculate the IRR of this investment.

(Hint: Plot the NPV as a function of the discount rate.)

The IRR of this investment is:(Select the best choice below.)

A.

The IRR is about 11.1%.

B.

There are multiple IRRs.

C.

The IRR is infinite as a result of the perpetuity.

D.

No positive IRR exists since the NPV, calculated as a function of various discount rates, never equals or exceeds zero.