Your factory has been offered a contract to produce a part for a new printer. The contract would last for three years, and your cash flows from the contract would be

$5.07

million per year. Your upfront setup costs to be ready to produce the part would be

$7.95

million. Your discount rate for this contract is

8.5%.

a. What is the IRR?

b. The NPV is

$5.00

million, which is positive so the NPV rule says to accept the project. Does the IRR rule agree with the NPV rule?