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(multiple IRRS and MIRR eBook A mining company is deciding whether to open a strip mine, which costs $1.5 million. Cash inflows of $13.5 million
(multiple IRRS and MIRR eBook A mining company is deciding whether to open a strip mine, which costs $1.5 million. Cash inflows of $13.5 million would occur at the end of Year 1. The land must be returned to its natural state at a cost of $11 million, payable at the end of Year 2. a , $ a. Select the project's NPV profile . A B D NPV (Millions of Dollars 2. 1.5 0.8 0. 0.5 O NPV (Millions of Dollars 2.5 1.5 NPV (Millions of Dollars 2.5 1.5 NPV (Millions of Dollars 2. 1. 0.2 0.5 05 0.5 0.5 100 200 300 400 100 200 300 400 100 200 300 400 100 200 300 400 500 WACC% 500 WACC%) 500 WACC 500 WACC% The correct sketch is D V b. Should the project be accepted if WACC = 10%? NO Should the project be accepted if WACC = 20%? Yes c. What is the project's MIRR at WACC = 10%? Do not round intermediate calculations. Round your answer to two decimal places. % What is the project's MIRR at WACC = 20%? Do not round intermediate calculations. Round your answer to two decimal places. % Does MIRR lead to the same accept/reject decision for this project as the NPV method? -Select- Does the MIRR method always lead to the same accept/reject decision as NPV? (Hint: Consider mutually exclusive projects that differ in size.) -Select- Save & Continue
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