Consider the following cash flows Cash flow 150 100 200 175 400 250 Time 0 1 2 3 4 5 The cost of capital is 10 What is the MIRR Answer as a percentage with 2 decimals Do not include the symbol Consider the MIRR and the IRR Which of the following is true For independent projects both the MIRR and IRR provide the same recommendations as the NPV For mutually exclusive projects both the MIRR and IRR provide better recommendations than the NPV There is always only 1 IRR The reinvestment rate for the IRR is the WACC Consider the following information for projects K and W Project K NPV $1,500 IRR 20 Project W NPV $2,500 IRR 15 Assume Project K and Project W are independent projects with a WACC 10 Which of the following is true Both Projects K and W should be enacted since both have a positive NPV Neither Project K or W should be enacted since both have a positive NPV Only Project K should be enacted since it has the highest IRR Only Project W should be enacted since it has the highest NPV Consider the following information for projects K and W Project K NPV $1,500 IRR 20 Project W NPV $2,500 IRR 15 Assume Project K and Project W are mutually exclusive projects with a WACC 10 Which of the following is true Only Project W should be enacted since it has the highest NPV Neither Project K or W should be enacted since both have a positive NPV Only Project K should be enacted since it has the highest IRR Both Projects K and W should be enacted since both have a positive NPV Consider the following series of cash flows Cash Flow 50 20 10 10 20 20 Time 0 1 2 3 4 5 If you are using a 10 discount rate, which of the following is true Payback will be larger than discounted payback Payback and discounted payback will be the same Payback will be smaller than discounted payback Payback and discounted payback will both be less than 0 A mining company is considering a new project Because the mine has received a permit, the project would be legal but it would cause significant harm to a nearby river The firm could spend an additional $10 million at year 0 to mitigate the environmental problem, but it would not be required to do so However, if the firm does not deal with the problem at year 0 they would face a lawsuit at the end of the project (year 5) at a cost of $20 million Developing the mine (without mitigation) would cost $60 million and the expected cash inflows would be $20 million for 5 years The weighted average cost of capital (WACC) is 12 Below is a summary of possible outcomes NPV with mitigation costs at time 0 included $2 1 million NPV without mitigation costs at time 0 and a lawsuit included in year 5 $0 75 million Should the project be undertaken If so, should the firm do the mitigation at time 0 No, the NPVs are positive for every possible scenario Yes, the project should be undertaken and the mitigation expense should be conducted at time 0 Yes, the project should be undertaken and no mitigation should be conducted at time 0 No, the project is too risky and should not be undertaken

Question

Consider the following cash flows  Cash flow  150 100  200 175 400 250 Time 0 1 2 3 4 5 The cost of capital is 10   What is the MIRR  Answer as a percentage with 2 decimals  Do not include the   symbol  Consider the MIRR and the IRR  Which of the following is true  For independent projects both the MIRR and IRR provide the same recommendations as the NPV For mutually exclusive projects both the MIRR and IRR provide better recommendations than the NPV There is always only 1 IRR The reinvestment rate for the IRR is the WACC Consider the following information for projects K and W  Project K  NPV   $1,500 IRR   20  Project W  NPV   $2,500 IRR   15  Assume Project K and Project W are independent projects with a WACC   10   Which of the following is true  Both Projects K and W should be enacted since both have a positive NPV Neither Project K or W should be enacted since both have a positive NPV Only Project K should be enacted since it has the highest IRR Only Project W should be enacted since it has the highest NPV Consider the following information for projects K and W  Project K  NPV   $1,500 IRR   20  Project W  NPV   $2,500 IRR   15  Assume Project K and Project W are mutually exclusive projects with a WACC   10   Which of the following is true  Only Project W should be enacted since it has the highest NPV Neither Project K or W should be enacted since both have a positive NPV Only Project K should be enacted since it has the highest IRR Both Projects K and W should be enacted since both have a positive NPV Consider the following series of cash flows  Cash Flow   50 20 10 10 20 20 Time  0 1 2 3 4 5 If you are using a 10  discount rate, which of the following is true  Payback will be larger than discounted payback Payback and discounted payback will be the same Payback will be smaller than discounted payback Payback and discounted payback will both be less than 0 A mining company is considering a new project  Because the mine has received a permit, the project would be legal  but it would cause significant harm to a nearby river  The firm could spend an additional $10 million at year 0 to mitigate the environmental problem, but it would not be required to do so  However, if the firm does not deal with the problem at year 0 they would face a lawsuit at the end of the project (year 5) at a cost of $20 million  Developing the mine (without mitigation) would cost $60 million and the expected cash inflows would be $20 million for 5 years  The weighted average cost of capital (WACC) is 12   Below is a summary of possible outcomes  NPV with mitigation costs at time 0 included   $2 1 million NPV without mitigation costs at time 0 and a lawsuit included in year 5   $0 75 million Should the project be undertaken  If so, should the firm do the mitigation at time 0  No, the NPVs are positive for every possible scenario  Yes, the project should be undertaken and the mitigation expense should be conducted at time 0  Yes, the project should be undertaken and no mitigation should be conducted at time 0  No, the project is too risky and should not be undertaken

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Consider the following cash flows: Cash flow -150 100 -200 175 400 250 Time 0 1 2 3 4 5 The cost of capital is

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	For independent projects both the MIRR and IRR provide the same recommendations as the NPV
	For mutually exclusive projects both the MIRR and IRR provide better recommendations than the NPV

	There is always only 1 IRR
	The reinvestment rate for the IRR is the WACC

	Both Projects K and W should be enacted since both have a positive NPV
	Neither Project K or W should be enacted since both have a positive NPV

	Only Project K should be enacted since it has the highest IRR
	Only Project W should be enacted since it has the highest NPV

	Payback will be larger than discounted payback
	Payback and discounted payback will be the same

	Payback will be smaller than discounted payback
	Payback and discounted payback will both be less than 0

	No, the NPVs are positive for every possible scenario.
	Yes, the project should be undertaken and the mitigation expense should be conducted at time 0.

	Yes, the project should be undertaken and no mitigation should be conducted at time 0.
	No, the project is too risky and should not be undertaken.