Question: You would like to develop an office building. Your analysts forecast that it will cost you $1,000,000 immediately (time 0), and it will cost you

You would like to develop an office building. Your analysts forecast that it will cost you $1,000,000 immediately (time 0), and it will cost you $500,000 in one year (time 1). They forecast you can sell the building for $2,400,000 in two years (time 2). If your discount rate is 25%, what is the net present value of this investment?

What is the IRR of the project? (if you are using an ordinary calculator, it is a quadratic equation; if you are using a financial calculator, use the CF method).

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