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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

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 statistic for the project are three and three and a half years, respectively.

Time 0 1 2 3 4 5
Cash Flow 100,000 30,000 45,000 55,000 30,000 10,000

Use the MIRR decision rule to evaluate this project; should it be accepted or rejected?

Multiple Choice

  • 10.60 percent, reject

  • 10.60 percent, accept

  • 15.33 percent, reject

  • 15.33 percent, accept

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