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A company is considering an investment project with the following cash flows: Year 1: -$50,000 (initial investment) Year 2: $20,000 Year 3: $25,000 Year 4:

  1. A company is considering an investment project with the following cash flows:
  • Year 1: -$50,000 (initial investment)
  • Year 2: $20,000
  • Year 3: $25,000
  • Year 4: $30,000

Calculate the payback period and the discounted payback period for the project, and determine which measure is more appropriate for this investment decision.


  1. A company wants to determine the modified internal rate of return (MIRR) for a project with the following cash flows:
  • Year 1: -$100,000 (initial investment)
  • Year 2: $35,000
  • Year 3: $45,000
  • Year 4: $55,000

The company has a cost of capital of 10% and wants to use a reinvestment rate of 12% for any positive cash flows.

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