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Free Response: Write your answers legibly and in an organized fashion in the space provided. PLEASE underline or circle your final answers and clearly
Free Response: Write your answers legibly and in an organized fashion in the space provided. PLEASE underline or circle your final answers and clearly label the work for each part of the question. 5 points each unless otherwise noted. 9. You have access to a project with the following cash flows: 3 0 1 2 -$5,500 $3,000 -$1,200 $5,000 a. What is the NPV of this project if the discount rate is 6%? (2.5 points) b. What is the NPV of this project if the discount rate is 10%? (2.5 points) C. Draw the NPV profile for this project using your answers to (a) and (b). d. Approximately (to the nearest whole percent) what is the Internal Rate of Return (IRR) of this project? YOU DO NOT NEED YOUR CALCULATOR e. To calculate the MIRR, again assume the discount rate is 6%, find the modified cash flows f. for this project and put them on a timeline. (HINT: You already did some calculations needed for this question in a.) With 6% discount rate, what is the MIRR of this project? What does the MIRR rule say you should do? (Accept or reject the project)
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