Question
Starwood Inc. is investigating a project with the following cash flows and its cost of capital...
Starwood Inc. is investigating a project with the following cash flows and its cost of capital is 13%.
Year Cash Flow
0 -$34,000,000
1 $ 9,000,000
2 $ 9,000,000
3 $ 9,000,000
4 $ 9,000,000
5 $ 9,000,000
6 $ 9,000,000
7 $ 9,000,000
What is the modified internal rate of return (MIRR) of this project?
Group of answer choices
26.47%
18.84%
18.31%
9.21%
15.57%
Homework Answers
Answer #1
Ans 15.57%
The modified internal rate of return (MIRR) of this project is 15.57%
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Starwood Inc. is investigating a project with the following cash flows and its cost of capital...
Starwood Inc. is investigating a project with the following cash
flows and its cost of capital is 13%.
Year
Cash Flow
0
-$34,000,000
1
$ 9,000,000
2
$ 9,000,000
3
$ 9,000,000
4
$ 9,000,000
5
$ 9,000,000
6
$ 9,000,000
7
$ 9,000,000
What is the internal rate of return (IRR) of this project?
Group of answer choices
18.84%
26.47%
15.57%
18.31%
9.21%
The IRR evaluation method assumes that cash flows from the project are reinvested at a rate...
The IRR evaluation method assumes that cash flows from the
project are reinvested at a rate equal to the project’s IRR.
However, in reality, the reinvested cash flows may not necessarily
generate a return equal to the IRR. Thus, using the modified IRR
approach, you can make a more reasonable estimate of a project’s
rate of return than the project’s IRR can.
Consider the following situation:
Cold Goose Metal Works Inc. is analyzing a project that requires
an initial investment...
A company is considering a project with the following cash flows: Time Cash Flow 0 -$100...
A company is considering a project with the following cash
flows:
Time Cash Flow
0 -$100 <<<<<<< negative
1 $100
2 -$100 <<<<<<< negative
3 $120 At a cost of capital of 10%:
a. What is the NPV?
b. What is the Modified Internal rate of Return?
Should the company accept this project?
Boca Center Inc. is considering a project that has the following cash flow and WACC data....
Boca Center Inc. is considering a project that has the following
cash flow and WACC data. What is the project's NPV? Note that a
project's expected NPV can be negative, in which case it will be
rejected.
WACC:
14.00%
Year
0
1
2
3
4
Cash flows
-$1,200
$400
$425
$450
$475
Group of answer choices
62.88
41.25
45.84
50.93
56.59
103.95
110.02
36.65
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Question 123.13 pts
Maxwell Feed & Seed is considering a project that has...
28. What is the modified internal rate of return (MIRR) for the following project? The cost...
28. What is the modified internal rate of return (MIRR) for the
following project? The cost of capital is 10%.
Time
0
1
2
3
Project A
-$350
$300
-$100
$200
a. 10.35%
b. 9.18%
c. 10.25%
d. 8.50%
31. Simkins Renovations Inc. is considering a project that has
the following cash flow data. What is the project's IRR?
Year
0
1
2
3
4
Cash flows
-$825
$296
$285
$300
$320
a. 16.65%
b. 14.61%
c. 17.24%
d. 13.59%
A project has the following total (or net) cash flows. __________________________________________ &nbs
A project has the following total (or net) cash flows.
__________________________________________
Year Total
(or net) cash flow
_________________________________________
1 $20,000
2 30,000
3 50,000
4 60,000
_________________________________________
The required rate of return on the project is 15 percent. The
initial investment (or initial cost or initial outlay) of the
project is $80,000.
a) Find the net present value (NPV) of the project.
b) Find the profitability index (PI) of the project.
c) Calculate the modified internal rate...
The IRR evaluation method assumes that cash flows from the project are reinvested at the same...
The IRR evaluation method assumes that cash flows from the
project are reinvested at the same rate equal to the IRR. However,
in reality the reinvested cash flows may not necessarily generate a
return equal to the IRR. Thus, the modified IRR approach makes a
more reasonable assumption other than the project’s IRR.
Consider the following situation:
Green Caterpillar Garden Supplies Inc. is analyzing a project
that requires an initial investment of $400,000. The project’s
expected cash flows are:
Year...
The project has projected cash flows as follows. The cost of capital (k) is 10% and...
The
project has projected cash flows as follows. The cost of capital
(k) is 10% and the payback period is 2.8 years. Should the project
be accepted under the mirr decision method?
Year. Cash flow
0. -100,000
1. 40,000
2. ??
3. 50,000
The IRR evaluation method assumes that cash flows from the project are reinvested at the same...
The IRR evaluation method assumes that cash flows from the
project are reinvested at the same rate equal to the IRR. However,
in reality the reinvested cash flows may not necessarily generate a
return equal to the IRR. Thus, the modified IRR approach makes a
more reasonable assumption other than the project’s IRR.
Consider the following situation:
Blue Llama Mining Company is analyzing a project that requires
an initial investment of $450,000. The project’s expected cash
flows are:
Year
Cash...
The Harris Company is considering a project, which costs $100,000 and will provide cash flows of...
The Harris Company is considering a project, which costs
$100,000 and will provide cash flows of $50,000 per year at the end
of each of the next 3 years. Harris’s cost of capital
is 10 percent. What is Harris’ modified internal rate of return
(MIRR)?
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