To calculate the Internal Rate of Return (IRR) for the project, we need to solve for the discount rate that makes the Net Present Value (NPV) of the project's cash flows equal to zero.

Here's a breakdown of the cash flows:

1. Development phase (Years 0 to 5): Costs $208,000 per year for 6 years (negative cash flows).
2. Production phase (Years 6 to 15): Generates $332,800 per year for 10 years (positive cash flows).

The formula for NPV is:

$NPV = \sum \left( \frac{CF_t}{(1+r)^t} \right)$ Where:

• $CF_t$ is the cash flow in year $t$,
• $r$ is the IRR,
• $t$ is the year of the cash flow.

At IRR, the NPV should be 0, so the equation becomes:

$0 = -\frac{208000}{(1+r)^1} - \frac{208000}{(1+r)^2} - \cdots - \frac{208000}{(1+r)^6} + \frac{332800}{(1+r)^7} + \cdots + \frac{332800}{(1+r)^{16}}$

Now, let's solve for the IRR using a financial formula approach.It seems that I cannot use the specific function for calculating the IRR directly in this environment. However, I can guide you through how to solve this manually or using a financial calculator.

Here's the method:

Step-by-Step Calculation

1. Initial Cash Outflows: There are 6 negative cash flows of $208,000 each, starting from Year 0 to Year 5. $CF_0 = CF_1 = CF_2 = CF_3 = CF_4 = CF_5 = -208,000$

2. Cash Inflows: For the next 10 years (Year 6 to Year 15), the project will generate $332,800 per year. $CF_6 = CF_7 = \cdots = CF_{15} = 332,800$

3. Setting NPV = 0: To solve for the IRR, you need to use trial and error or a financial calculator where the NPV of the cash flows equals zero.

You can use Excel's =IRR() function or any financial calculator to compute the IRR for the cash flow series:

• Input the sequence: -208000 (for 6 years), 332800 (for 10 years) into the formula.

Would you like me to show how to calculate IRR using Excel or suggest another method?