1. A company is considering an investment that requires an immediate investment of $500,000 and an additional investment of $125,000 in year 3. The investment will generate annual profits of $200,000...

1.
A company is considering an investment that requires an immediate investment of $500,000 and an additional investment of $125,000 in year 3. The investment will generate annual profits of $200,000 for five years, starting from year 2.

a. Calculate the IRR for this investment.%

Round to two decimal places

b. If the cost of capital is 7.5%, should the company undertake the investment?