Question
Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $2,500,000. The projects expected cash flows are: Year Cash Flow Year 1
Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $2,500,000. The projects expected cash flows are:
| Year | Cash Flow |
|---|---|
| Year 1 | $300,000 |
| Year 2 | 100,000 |
| Year 3 | 450,000 |
| Year 4 | 425,000 |
Celestial Crane Cosmeticss WACC is 8%, and the project has the same risk as the firms average project. Calculate this projects modified internal rate of return (MIRR):
-15.97%
22.09%
29.45%
23.31%
If Celestial Crane Cosmetics 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 less than its MIRR.
A typical firms IRR will be greater than its MIRR.
A typical firms IRR will be equal to its MIRR.
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The Leverage Space Trading Model
Authors: Ralph Vince
1st Edition
0470455950, 978-0470455951
