Question
Blue Llama Mining Company is analyzing a project that requires an initial investment of $3,225,000. The projects expected cash flows are: Year Cash Flow Year
Blue Llama Mining Company is analyzing a project that requires an initial investment of $3,225,000. The projects expected cash flows are:
Year | Cash Flow |
---|---|
Year 1 | $350,000 |
Year 2 | 200,000 |
Year 3 | 450,000 |
Year 4 | 425,000 |
Blue Llama Mining 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):
-20.57%
18.07%
17.32%
16.57%
If Blue Llama Mining Companys managers select projects based on the MIRR criterion, they should this independent project.
Which of the following statements about the relationship between the IRR and the MIRR is correct?
A typical firms IRR will be equal to its MIRR.
A typical firms IRR will be greater than its MIRR.
A typical firms IRR will be less than its MIRR.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started