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I need help ms 19-22 12-19 Multiple Rates of Return The Ulmer Uranium Company is deciding whether or not to open a strip mine whose
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ms 19-22 12-19 Multiple Rates of Return The Ulmer Uranium Company is deciding whether or not to open a strip mine whose netcost is $4.4 million. Net cash inflows are expected to be $27.7 million. all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2 a. Plot the project's NPV profile. b. Should the project be accepted if r = 8%? If r = 140? Explain your reasoning. c. Can you think of some other capital budgeting situations in which nega- tive cash flows during or at the end of the project's life might lead to multiple IRRS? d. What is the project's MIRR at r = 8%? At r = 14%? Does the MIRR method lead to the same accept-reject decision as the NPV method? -22 12-19 Multiple Rates of Return The Ulmer Uranium Company is deciding whether or not to open a strip mine whose netcost is $4.4 million. Net cash inflows are expected to be $27.7 million. all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2 a. Plot the project's NPV profile. b. Should the project be accepted if r- B9? Ift-14%? Explain your reasoning. c. Can you think of some other capital budgeting situations in which nega- tive cash flows during or at the end of the project's life might lead to multiple IRRS? d. What is the project's MIRR at r = 8? Atr = 14%? Does the MIRR method lead to the same accept-reject decision as the NPV method Step by Step Solution
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