(MIRR) Star industries owns and operates landfills for several municipalities throughout the Midwestern part of the U.S. Star typically contracts with the municipality to provide landfili services for a period of 20 years. The firm then constructs a lined landfit (required by federal law) that has capacity for five years. The $9.6 milion expenditure required to construct the new landfill results in negative cash flows at the end of years 5,10 , and 15. 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 landfil investment contracts. The annual cash inflows to Star begin in year 1 and extend through year 20 are estimated to equal $3.1 million (this does not reflect the cost of constructing the landfils every five years). Star uses a 9.8% discount rate to evaluate its new projects, so it plans to discount all the construction costs every five years back to year 0 using this rate before calculatina the MIRR. a. The projects NPV where the discount rate is 9.8% is $ million. (Round to two decimal places.) The project's IRR is \%. (Round to two decimal places.) The MIRR of the project with a discount rate of 9.8% is \%. (Round to two decimal places.) b. Is this a good investment opportunity for Star Industries? Why or why not? (Select the best choice below) A. No, the project is not worthwhile based on any of the measures because the IRR and the MIRR are less than the discount rate and the NPV is negative. B. The project is only worthwhile based on the NPV measure because the IRR and the MIRR are less than the discount rate but the NPV is positive. c. Yes, the project is worthwhile based on all of the measures because the IRR and the MIRR are more than the discount rate and the NPV is positive. D. The project is only worthwhile based on the IRR measure because the IRR is greater than the discount rate, but the MIRR is less than the discount rate and the NPV is negative. twe years bock to year o usting this rate belore caloulating the MirR. 2. What abe the propecti NPV, IRR, and MipR? b. Is this a good investrent opportunity for Star industries? Why or why not? 2. The projecrs NPV where the dscount rate is 9.8% in 9 milion. (Found so two decmat places) The proiedre IRR is 6. (Round to two decimal etaciss) The MIRR of the propect wath a dscount rate of a aw is 15. (Round to two decimal places.) b. Is tha a good investment opportunty for Star Industries? Why or why not? (Select the bett choice below) C. Yes, the project is worthwhie based on all of the messures because the IRR and the MikR are more than the discount rate and the NPV is positiv
