Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the MIRR decision to evaluate this project; should it be accepted or rejected?

Time = 0 1 2 3 4 5 6

Cash Flow $ 5,000 $ 1,200 $ 1,400 $ 1,600 $ 1,600 $ 1,100 $ 2,000

Multiple Choice

MIRR = 12.58 percent, accept the project

MIRR = 13.59 percent, accept the project

MIRR = 7.96 percent, reject the project

MIRR = 7.19 percent, reject the project