Question
Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is
Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10% and that the investments will produce the following after-tax cash flows (in millions of dollars):
| Year | Project A | Project B |
| 1 | 5 | 20 |
| 2 | 10 | 10 |
| 3 | 15 | 8 |
| 4 | 20 | 6 |
f. What is the crossover rate?
g. If the cost of capital is 10%, what is the modified IRR (MIRR) of each project?
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Impact Investing In Africa A Guide To Sustainability For Investors Institutions And Entrepreneurs
Authors: Edward Mungai
1st Edition
3030004279,3030004287
