Question

Mooradian Corporation estimates that its required rate of return is 11 percent. The company is considering...

Mooradian Corporation estimates that its required rate of return is 11 percent. The company is considering two mutually exclusive projects whose after-tax cash flows are as follows:

Year

Project S

Project L

0

−$3,000

−$9,000

1

2,500

−1,000

2

1,500

5,000

3

1,500

5,000

4

−500

5,000

What is the modified internal rate of return (MIRR) of the project with the lowest NPV?

a.

11.89%
b.

20.12%
c.

14.26
d.

18.25%
e.

13.66%
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
MIRR and NPV Your company is considering two mutually exclusive projects, X and Y, whose costs...
MIRR and NPV Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y 0 -$5,000 -$5,000 1 1,000 4,500 2 1,500 1,500 3 2,000 1,000 4 4,000 500 The projects are equally risky, and their cost of capital is 15%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Do not round intermediate calculations. Round your answers...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y 0 -$5,000 -$5,000 1 1,000 4,500 2 1,500 1,500 3 2,000 1,000 4 4,000 500 The projects are equally risky, and their cost of capital is 14%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Round your answers to two decimal places. Project X % Project...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y 0 -$5,000 -$5,000 1 1,000 4,500 2 1,500 1,500 3 2,000 1,000 4 4,000 500 The projects are equally risky, and their cost of capital is 11%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Do not round intermediate calculations. Round your answers to two decimal...
You are considering the following two mutually exclusive projects. The required return on each project is...
You are considering the following two mutually exclusive projects. The required return on each project is 16 percent. Which project should you accept and what is the best reason for that decision? Year Project A Project B 0 -$10,000 -$20,000 1 $8,000 $16,000 2 $4,000 $9,000 3 $3,000 $5,000 4 $9,000 $7,000 A. Project A; because it pays back faster B. Project A; because it has the higher internal rate of return C. Project B; because it has the higher...
If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV)...
If mutually exclusive projects with normal cash flows are being analyzed, the net present value (NPV) and internal rate of return (IRR) methods   agree. Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. Year Project Y Project Z 0 –$1,500 –$1,500 1 $200 $900 2 $400 $600 3 $600 $300 4 $1,000 $200    If the weighted average cost of capital (WACC) for each project is 14%, do the NPV and...
2. A company is considering a project that has the following cash flows: C0 = -3,000,...
2. A company is considering a project that has the following cash flows: C0 = -3,000, C1 = +900, C2 = +500, C3 = +1,100, and C4 = +1,900, with a risk-adjusted discount rate of 8%. A) Calculate the Net Present Value (NPV), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), and Profitability Index (PI) of this project. B) If you were the manager of the firm, will you accept or reject the project based on the...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal...
All projects (A to G) are 7-year projects. NPV = Net present value. IRR = internal rate of return. MIRR = modified internal rate of return. PI = profitability index. Project A Project B Project C Project D Project E Project F Project G NPV= $4,711 ($711) ($657) $334 $9,842 $7,360 ($3,224) IRR= 44.51% 5.47% 8.06% 12.98% 22.56% 17.19% 5.47% MIRR= 25.23% 7.50% 8.97% 11.57% 16.26% 13.70% 7.50% PI= 2.178 0.822 0.945 1.028 1.394 1.294 0.871 The discounting rate (r)...
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to...
Dorati Inc. is considering two mutually exclusive projects.  Dorati used a 15% required rate of return to evaluate capital expenditure projects.  If the two projects have the costs and cash flows shown below, determine the NPV for each. Year                             Project S                                   Project T    0                                -$70,000                                   -$100,000    1                                  $50,000                                      $60,000    2                                  $60,000                                      $70,000    3                                                                                    $80,000                        4                                                                                    $90,000
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows...
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y 0 -5000 -5000 1 1000 4500 2 1500 1500 3 2000 1000 4 4000 500 The projects are equally risky, and their cost of capital is 13%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Do not round intermediate calculations. Round your answers to two decimal...
6. Understanding the NPV profile If projects are mutually exclusive, only one project can be chosen....
6. Understanding the NPV profile If projects are mutually exclusive, only one project can be chosen. The internal rate of return (IRR) and the net present value (NPV) methods will not always choose the same project. If the crossover rate on the NPV profile is below the horizontal axis, the methods will agree. Projects Y and Z are mutually exclusive projects. Their cash flows and NPV profiles are shown as follows. Year Project Y Project Z 0 –$1,500 –$1,500 1...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT