. Simson and Simpson, Inc. has an investment proposal (Project A) with the following characteristics:

________________________________________

PROJECT A

________________________________________

Period Investment Cash Flows

________________________________________

0 $100,000 -

1 $40,000

2 $20,000

3 $(30,000)

4 $20,000

5 $40,000

Compute its net present value (NPV), internal rate of return (IRR) and modified internal rate of return (MIRR). Wherever necessary, assume a discount rate of 5%. Should the project be accepted, why? (4+5+3+3)