10. Cashflow patterns and the modified rate of return calculation Henderson Manufacturing Inc. is analyzing a project with the following projected cash flows: Year Cash Flow 0 1 -$1,600,000 350,000 550,000 660,000 2 3 4 440,000 This project exhibits cash flows. Henderson's desired rate of return is 6.00%. Given the cash flows expected from the company's new project, compute the project's anticipated modified Internal rate of return (MIRR). (Hint: Round all dollar amounts to the nearest whole dollar, and your final MIRR value to two decimal places.) 6.7796 7.17% 7.97% 9.5696 Henderson's managers are generally conservative anc select projects based solely on the project's modified internal rate of return (MIRR), Should the company's managers accept this independent project? No Yes Henderson's managers are generally conservative, and select projects based solely on the project's modified Internal rate of return (MIRR). Should the company's managers accept this Independent project? O No Yes You've just learned that the analyst who assembled the project's projected cash flow Information used above didn't know his inflows from his outflown. You've reexamined the source data and determined that the revised annual cash flow Information should be: Year Cash Flow 0 -$1,317,500 1 2 350,000 -400,000 480,000 3 4 320,000 (Hint: Again, if Henderson's desired rate of return is 6.00%, then the project's revised modified Internal rate of return (MIRR) should be Round all dollar amounts to the nearest whole dollar, and your final MIRR value to two decimal places.) I again, Henderson's managers continue to exhibit their general conservatism and select their investment projects based only on the project's MIRR, should they accept the project? No Yes