Carraway Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where

Question:

Carraway Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project would require an initial cash outlay of $20 million and would generate annual cash inflows of $4 million per year for Years 1 through 3. In Year 4 the project will require an investment outlay of $5,000,000. During Years 5 through 10 the project will provide cash inflows of $2 million per year.
a. Calculate the project’s NPV and IRR where the is 12 percent. Is the project a worthwhile investment based on these two measures? Why or why not?
b. Calculate the project’s MIRR. Is the project a worthwhile investment based on this measure? Why or why not?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...