You are heading the R&D department of a growing biotech company. You have identified an investment opportunity that would require a $5 million investment upfront in terms of personnel and lab equipment and subsequent cash outflows of $500,000 per year. The company did a market study that suggests a cash revenue stream of $2.15 million per year for three years and then $1.6 million per year for another three years. At the end of the sixth year, it is estimated that the lab equipment could be sold for a salvage value of $200,000. Assume that all of the cash flows are net of taxes. In terms of risk, the project would be similar to others in the firm, which uses a hurdle rate of 1896. Question 7 From a purely economic perspective, should you invest in this project? A No, because it has a negative NPV B Yes, because it has a positive NPV No, because you are not able to exactly estimate a discount rate for NPV calculation Yes because the IRR equals your average yield on the baseball card investment Question 8 What is the IRR of the project? A) 20% B 18% C 19% 21% 10 Points 10 Points