1. Fuzzy Button Clothing Company is analyzing a project that requires an investment of $3,225,000. The projects expected cash flows are:

Year	Cash Flow
Year 1	$300,000
Year 2	-200,000
Year 3	$450,000
Year 4	$500,000

Fuzzy Button Clothing Companys WACC is 8%, and the project has the same risk as the firms average project. Calculate this projects modified internal rate of return (MIRR).

a. 13.78%

b. -20.40

c.16.08%

d. 18.37%

2. If Fuzzy Button Clothing Companys managers select projects based on the MIRR criterion, they ______, this independent project.

a. Accept

b. Reject

3. Which of the following statements about the relationship between IRR and the MIRR is correct?

a. A typical firms IRR will be greater than its MIRR

b. A typical firms IRR will be less than its MIRR

c. A typical firms IRR will be equal to its MIRR