Question
You are evaluating a project with the following estimated cash flows: Year Cash Flow 0 -25,000 1 7,000 2 7,000 3 -1,000 4 7,000 5
You are evaluating a project with the following estimated cash flows:
| Year | Cash Flow |
| 0 | -25,000 |
| 1 | 7,000 |
| 2 | 7,000 |
| 3 | -1,000 |
| 4 | 7,000 |
| 5 | 7,000 |
a. Assuming a cost of capital of 10%, compute the modified internal rate of return. Do the calculation by hand and show all of your work.
b. (EXCEL) Using the MIRR function in Excel, confirm your answer in part a.
c. Explain whether the project should be accepted
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Challenging Global Finance
Authors: Elizabeth Friesen
2012th Edition
0230348793, 978-0230348790
