Question 11.4 The Basics of capital budgeting. Modified internal rate of return.

\"reliant mm (HIRE) \"Aa- _. memoir! assumes that cash ours from the project are reinvested at the same rate equal to the v , in reality the reinvested cash OWS may not necessarily generate a return equal to the IRR. Thus, the m approaci'l makes a more reasonable assumpon other than the project's IRR. the following situation: Button Clothing Company is analyzing a project that requires an initial inve stment of $600,000. The project's --- a cash ows are: E. Year Cash Flow gear? $3EEUE Year 2 100,000 Year 3 755,000 Year 4 425,000 than Clothing Company's WACC is 8%, and the project has the same ri .. athisproject's modied internal rate of return {MIRRJz sk as the rm's average projects