Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(Calculating MIRR) OTR Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a

(Calculating MIRR) OTR Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project will require an initial cash outlay of $18 million and will generate annual cash inflows of $3.8 million per year for Years 1 through 3. In Year 4, the project will provide a net negative cash flow of $4.5 million due to anticipated expansion of and repairs to the facility. During Years 5 through 10, the project will provide cash inflows of $2.2 million per year.

a. Calculate the project's NPV and IRR where the discount rate is

11.8 percent. Is the project a worthwhile investment based on these two measures? Why or why not? PLEASE PUT ANSWERS IN MILLIONS

I know the NPV is -5.9 million. I cant figure the rest out.

b. Calculate the project's MIRR. Is the project a worthwhile investment based on this measure? Why or why not?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Corporate Finance

Authors: William L. Megginson, M.D. Lucey Brian C., Scott J. Smart, Scott B. Smart, Bill Megginson

1st Edition

184480562X, 9781844805624

More Books

Students also viewed these Finance questions