$131$

a

B

c

D

E

$F$

$G$

H

I

J

$1$

Strip Mining Inc, can develop a new mine at an initial cost of $$5$ million. The mine will provide a cash flow of $$30$ million in $1$ year. The land then must be reclaimed at a cost of $$28$ million in the second year. What are the IRRs of this project? Should the firm develop the mine if the discount rate is $10\%?20\%?350\%?400\%?$