Question

1. What's the internal rate of return of the following cash flows with a 8% WACC?

2. What's the modified internal rate of return of the following cash flows with a 8% WACC?

Year 0 = 100,000

Year 1 = 10,000

Year 2 = 50,000

Year 3 = 45,000

Year 4 = 25,000

3. How long should a company keep the following project?

WACC = 8%

CF year 0 = 1,500,000

Salvage = 1,500,000

CF year 1 = 750,000

Salvage = 1,250,000

CF year 2 = 600,000

Salvage - 425,000

CF year 3 = 800,000

Salvage = 0.00

Answer #1

**Formulas used:-**

IRR |
=IRR(C4:C8) |

MIRR |
=MIRR(C4:C8,B2,B2) |

Value of the project if Disposed off in Year 1 | =PV(8%,1,-750000,-1250000)-1500000 |

Value of the project if Disposed off in Year 2 | =1025000/(1.08)^2+750000/1.08-1500000 |

Value of the project if Disposed off in Year 3 | =800000/1.08^3+600000/1.08^2+750000/1.08-1500000 |

We should Disposed it Off
in |
Year 1 |

What is the Modified Internal Rate of Return (MIRR) for the
following cash flows? Assume that the required rate of return is
4%
Year
CFs
0
-1,000
1
100
2
200
3
350
4
800

4. Modified internal rate of return (MIRR)
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 $2,500,000....

Find the modified internal rate of return for the following
annual series of cash flows: given a discounted rate of 10.50%:
year 0 - 60,000$: year 1: 15,000$, Year 2: 16,000$, Year 3:17,000$
and year 4: 17,00$

Given the following end of year cash flows (CF) estimate the
internal rate of return (IRR) of this project. If the project’s
cost of capital is 10%, would you undertake this project?
Timeline 0 1 2 3 4 CF 0 700 700 700 -3,000
Group of answer choices
No; IRR = 18.93%
Yes; IRR = 18.93%
No; IRR = 7.50%
Yes, IRR is greater than the cost of capital

8. Modified internal rate of return (MIRR)
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 :
Cute Camel Woodcraft Company is analyzing a project that
requires an initial investment of $3,225,000....

Find the modified internal rate of return (MIRR) for the
following series of future cash flows if the company is able to
reinvest cash flows received from the project at an annual rate of
13.72 percent.The initial outlay is $470,600.
Year 1: $185,900
Year 2: $185,100
Year 3: $125,700
Year 4: $183,400
Year 5: $184,100
Round the answer to two decimal places in percentage
form.
How do I do this in excel?

Find the modified internal rate of return (MIRR) for the
following series of future cash flows if the company is able to
reinvest cash flows received from the project at an annual rate of
12.92 percent. the initial outlay is $439,500.
Year 1: $130,600
year 2: 178,600
year3: 147,800
Year 4: 133,600
Year 5: 155,700
Round answer to two decimal places.

What is the Internal Rate of Return on an investment with the
following cash flows?
Year Cash Flow...
0 -$761,125
1 $330,500
2 $454,700
3 $161,200
Answers:
a. 12.93 percent
b. 9.42 percent
c. 11.88 percent
d. 14.71 percent
e. 10.96 percent

A project has the following cash flows. What is the internal
rate of return? THE ANSWER IS 21.32% PLEASE SHOW WORK WITHOUT USING
EXCEL
YEAR 0 1 2 3
NET INCOME -$390,000 $168,000 $190,000 $218,600

4. Modified internal rate of return (MIRR)
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 $3,225,000....

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