1

The internal rate of return:

Is easy to understand.

Is principally used to evaluate small dollar projects.

May produce multiple rates of return when cash flows are conventional.

Is best used when comparing mutually exclusive projects.

Is rarely used in the business world today.

2

Slow Ride Corp. is evaluating a project with the following cash flows:

Year	Cash Flow
0	$13,700
1	5,800
2	6,500
3	6,200
4	5,100
5	5,600

The company uses a 11 percent discount rate and an 7 percent reinvestment rate on all of its projects. Calculate the MIRR of the project using all three methods using these interest rates.

Required:
(a)	MIRR using the discounting approach.(Do not round your intermediate calculations.)
	(Click to select)12.88%14.05%15.53%14.79%15.09%

(b)	MIRR using the reinvestment approach.(Do not round your intermediate calculations.)
	(Click to select)10.45%10.97%13.14%9.93%10.66%

(c)

MIRR using the combination approach.(Do not round your intermediate calculations.)

(Click to select)11.09%10.56%10.03%10.77%11.87%

3

4 A project's average net income divided by its average book value is referred to as the project's average:

Accounting return.

Net present value.

Profitability index.

Payback period.

Internal rate of return.

5

What is the IRR of the following set of cash flows?

Year	Cash Flow
0	$9,556
1	4,300
2	5,400
3	4,800

rev: 09_18_2012

23.6%

22.42%

24.78%

23.13%

24.07%