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What have I done wrong? Can you please show your work on how to get to the correct answer (one of the multiple choices)? 0
What have I done wrong? Can you please show your work on how to get to the correct answer (one of the multiple choices)?
0 40. Zerro Products is considering Projects Sand I, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO believes the IRR is the best selection criterion, while the CFO advocates the MIRR. If the decision is made by choosing the project with the higher IRR rather than the one with the higher MIRR, how much, if any, value will be forgone? Note that under some conditions the choice wilt have no effect on the value gained or lost. WACC = 10%. Year CFS CF -$1,100-$2,700 1 $550 $650 $600 $725 3 $100 $800 $100 $1,400 a. -$1.60 b. $1.44 c. $1.30 d. $0.00 e, $1.60 2 Q40 WACC Year o 1 10% CF S CFT ($1,100) $550 $600 $100 $100 PV @ 10% PVCF S ($2,700) 1 $650 0.909090909 $725 0.826446281 $800 0.751314801 $1,400 0.683013455 PCVET ($1,100) $500 $496 $75 $68 2 ($2,700) $591 $599 $601 $956 3 4 S MIRR T MIRR S NPV 10.97% SIRR 10.48% TIRR $39.30 TNPV 12.24% 10.71% $47.35 Difference in NPV ($8.05)
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