Question
please help with both 6. Your company is considering an investment opportunity with the following projected cash flows. What is the potential projects Modified Internal
please help with both
6.
Your company is considering an investment opportunity with the following projected cash flows. What is the potential projects Modified Internal Rate of Return (MIRR)? Assume a WACC of 7.2%
Year | Cash Flow |
0 | -$850 |
1 | 300 |
2 | 320 |
3 | 340 |
4 | 355 |
Enter your answer as a decimal with a leading zero and 4 decimal places of precision (i.e. 0.1234).
Round intermediate future values to 4 decimal places of precision.
28.
Which of the following statements is CORRECT? Assume that the project being considered has conventional cash flows, with one outflow followed by a series of inflows.
a. | One drawback of the regular payback criterion for evaluating projects is that this method does not properly account for the time value of money. | |
b. | The longer a projects payback period, the more desirable the project is normally considered to be by this criterion. | |
c. | The regular payback ignores cash flows beyond the payback period, but the discounted payback method overcomes this problem. | |
d. | If a projects payback is positive, then the project should be rejected because it must have a negative NPV. | |
e. | If a company uses the same payback requirement to evaluate all projects, then the company will tend to reject projects with relatively short lives and accept long-lived projects, and this will cause its risk to increase over time. |
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