This change in sign on the stream of cash flows over the 20-year contract period introduces the potential for multiple IRRs, so Star’s management has decided to use the MIRR to evaluate new landfill investment contracts.

The annual cash inflows to Star begin in Year 1 and extend through Year 20 and are estimated to equal $3 million (this does not reflect the cost of constructing the landfills every 5 years). Star uses a 10 percent discount rate to evaluate its new projects, so it plans to discount all the construction costs every 5 years back to Year 0 using this rate before calculating the MIRR.

a. What are the project’s NPV, IRR, and MIRR?

b. Is this a good investment opportunity for Star Industries? Why or why not?