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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
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10.60 percent, reject
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10.60 percent, accept
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15.33 percent, reject
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15.33 percent, accept
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