Question $11$

$5$ pts

Consider a long$-$term project undertaken by a U$.$S$.-$based multinational corporation $($MNC$)$ in the U$.$K$.,$ with an initial cost of $125,000.$ The project is expected to generate the following annual net cash flows, which can be remitted to the parent company over the next five years: $17,000,18,000,16,000,21,000,$ and $22,000.$ Additionally, the project will have a salvage value of $65,000$ at the end of its lifespan.

The current spot exchange rate is $1=$$$1\mathrm{.}35$I and the British pound $()$ is anticipated to appreciate by $2\mathrm{.}5\%$ per year.

From the parent company's perspective. calculate the project's Internal Rate of Return $($IRR$)$ based on cash flows denominated in U$.$S$.$ dollars.

$10\mathrm{.}20\%$

$9\mathrm{.}12\%$

$4\mathrm{.}02\%$

$272\%$