Mike wants to start his own business. The initial investment required is $75,000 and the project's beta is 1.1. The estimated annual net cash flows are given below:
Year 1: 15,000
Year 2: 25,000
Year 3: 35,000
Year 4: 40,000
Mike can invest the same amount of funds in the market and expect to earn 12%, or he can purchase government securities and earn 6%. Assuming that Mike's after-tax cost of debt is 7% and his target debt to equity ratio is 0.4, calculate NPV and IRR for the project.