Question

Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow

0 –$12,400

year | cash flow |

0 | - $12,400 |

1 | $5,900 |

2 | $6,200 |

3 | $5,900 |

4 | $4,800 |

5 | -$4,400 |

The company uses a disount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects. Calculate the MIRR of the project using all three methods using these interest rates

. a. MIRR using the discounting approach.

b. MIRR using the reinvestment approach.

c. MIRR using the combination approach.

Answer #1

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Problem 9-20 MIRR [LO6]
RAK Corp. is evaluating a project with the following cash
flows:
Year
Cash Flow
0
–$
30,000
1
12,200
2
14,900
3
16,800
4
13,900
5
–
10,400
The company uses a discount rate of 12 percent and a
reinvestment rate of 7 percent on all of its projects.
Calculate the MIRR of the project using the discounting
approach. (Do not round intermediate calculations. Enter
your answer as a percent rounded to 2...

Solo Corp. is evaluating a project with the following cash
flows:
Year
CF
0
-$48,000
1
17,000
2
21,900
3
25,400
4
18,000
5
-6,500
Use the discounting approach to determine the MIRR. Assume the
discount rate is 8%.
Select one:
A. 15.64%
B. 19.86%
C. 20.32%
D. 20.98%
E. 21.51%

A company is evaluating a project with the following cash
flows:
Year
CASH FLOW
0
-49,000
1
13,700
2
25,200
3
30,500
4
19,800
5
-8,500
The company uses an interest rate of 10% on all projects,
Calculate the MIRR of the project using all three methods

Yellow Day has a project with the following cash flows:
Year Cash Flows
0: −$25,400
1: 9,750
2: 13,900
3: 8,760
4: −2,800
What is the MIRR for this project using the reinvestment
approach? The interest rate is 7 percent

A project has the following cash flows :
Year Cash Flows
0. ?$11,600
1. 5,050
2. 7,270
3. 4,720
4. ?1,660
Assuming the appropriate interest rate is 10 percent, what is
the MIRR for this project using the discounting approach?
11.00%
17.51%
13.91%
13.20%
16.22%

Consider the following two mutually exclusive projects:
Year
Cash Flow (A)
Cash Flow (B)
0
–$40,000
–$180,000
1
25,000
15,000
2
22,000
45,000
3
20,000
50,000
4
15,000
275,000
The required return on these investments is 11 percent.
Required:
(a)
What is the payback period for each project?
(Do not round intermediate
calculations. Round your answers to 2 decimal
places (e.g., 32.16).)
Payback period
Project A
years
Project B
years ...

Anderson International Limited is evaluating a project in
Erewhon. The project will create the following cash flows:
Year
Cash Flow
0
–$582,000
1
212,000
2
155,000
3
220,000
4
199,000
All cash flows will occur in Erewhon and are expressed in
dollars. In an attempt to improve its economy, the Erewhonian
government has declared that all cash flows created by a foreign
company are “blocked” and must be reinvested with the government
for one year....

YEAR PROJECT A CASH FLOW PROJECT B CASH
FLOW
0 -110,000 -110,000
1 30,000 0
2 30,000 0
3 30,000 0
4 30,000 0
5 30,000 230,000
(Mutually exclusive projects and NPV) You have been assigned
the task of evaluating two mutually exclusive projects with the
following projected cash flows: If the appropriate discount rate
on these projects is 12 percent, which would be chosen and
why?

If an investment project is described by the sequence of cash
flows:
Year
Cash flow
0
-300
1
-900
2
1100
3
500
Calculate the MIRR, we will assume a finance rate of 8% and a
reinvestment rate of 10% [5]
Find the IRR (using 7%, 10%, 11%) of an investment having
initial cash outflow of $3,000. The cash inflows during the first,
second, third and fourth years are expected to be $700, $800, $900
and $1,200 respectively
[5]...

A company is evaluating an investment project with the following
forecast cash flows:
Year
0
1
2
3
4
Cash flow($m)
(6.5)
2.4
3.1
2.1
1.8
Using discount rates of 15% and 20%, what is the internal rate
of return of the investment project?

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