You have recently commenced working for BG Corp and are reviewing a four-year project which the company is considering for investment. The project is in a business activity which is very different from BG’s current line of business. The following information has been collected for the project:
(i) Sales forecast for each year starting from year one is 250,000 units, 400,000 units, 600,000 units, and 300,000 units. The price per unit for year one is RM100. This price will increase by three percent each year.
(ii) The direct project costs are estimated to be 60% of sales.
(iii) Fixed operating costs each year are RM6 million. Within these costs are apportioned fixed overheads equal to 20 per cent of the fixed operating costs. As far as could be seen, none of these overheads are incurred as a result of the proposal.
(iv) The marketing director mentioned that to stand a realistic chance of hitting the sales forecast for the proposal, the marketing department would require RM2,000,000 for additional advertising and sales promotion at the start of the project and a further RM800,000 a year for the next three years. The sales forecast and advertising effort had been devised in consultation with marketing consultants whose bill for RM250,000 had just been paid.
(v) The project will require an initial investment in plant and machinery of RM25 million. Tax allowable depreciation is available on the plant and machinery at a rate of 50% in the first year, followed by 25% per year thereafter. The expected salvage value of the plant and machinery is RM4 million when the project ceases.
(vi) An initial working capital of RM4 million is required and the amount will be recovered when the project is terminated.
(vii) To finance the investment, BG will borrow RM20 million and the interest rate on the borrowing is 10%.
(viii) BG pays 24% tax on its annual taxable profits and required a return of 15% for investment in unrelated projects.

what is the internal rate of return?​