Question

Carraway Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project would require an initial cash outlay of $20 million and would generate annual cash inflows of $4 million per year for Years 1 through 3. In Year 4 the project will require an investment outlay of $5,000,000. During Years 5 through 10 the project will provide cash inflows of $2 million per year.
a. Calculate the project’s NPV and IRR where the discount rate is 12 percent. Is the project a worthwhile investment based on these two measures? Why or why not?
b. Calculate the project’s MIRR. Is the project a worthwhile investment based on this measure? Why or why not?



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  • CreatedOctober 31, 2014
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