Question
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for your company are 3 and 3.5 years, respectively.
| Time: | 0 | 1 | 2 | 3 | 4 | 5 |
|---|---|---|---|---|---|---|
| Cash flow: | −$245,000 | $66,800 | $85,000 | $142,000 | $123,000 | $82,200 |
Use the MIRR decision rule to evaluate this project.
Note: Do not round intermediate calculations and round your final answer to 2 decimal places.
MIRR____________ %
Should it be accepted or rejected?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Based on the MIRR decision rule the project should be rejected Heres the breakdown Ca...
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Step: 2
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Finance Applications and Theory
Authors: Marcia Cornett, Troy Adair
3rd edition
1259252221, 007786168X, 9781259252228, 978-0077861681
