Problem:

Tangshan Mining Company is considering investing in a new mining project. The firm's cost of capital is 12 percent and the project is expected to have an initial after tax cost of $5,000,000. Furthermore, the project is expected to provide after-tax operating cash flows of $2,500,000 in year 1, $2,300,000 in year 2, $2,200,000 in year 3, and ($1,300,000) in year 4.

Required:

Question 1: Calculate the project's NPV?

Question 2: Calculate the project's IRR?

Question 3: Should the firm make the investment.

Note: Solve the problem and show all work.