# Question: Project X has a cost of capital of 8 percent

Project X has a cost of capital of 8 percent and the following cash flows: investment of $10,000 in year 0, cash inflows of $5,000, $ 3,000, and $4,000 in years 1, 2, and 3.

a. What is the IRR? What is the assumption of IRR on reinvesting cash?

b. Suppose the cash is deposited in an account with a 2% annual interest rate. What is the MIRR?

c. Suppose the cash is deposited in an account with a 8% annual interest rate. What is the MIRR?

d. Suppose the cash is deposited in an account with a 10.179% annual interest rate. What is the MIRR?

a. What is the IRR? What is the assumption of IRR on reinvesting cash?

b. Suppose the cash is deposited in an account with a 2% annual interest rate. What is the MIRR?

c. Suppose the cash is deposited in an account with a 8% annual interest rate. What is the MIRR?

d. Suppose the cash is deposited in an account with a 10.179% annual interest rate. What is the MIRR?

**View Solution:**## Answer to relevant Questions

State the drawbacks of the payback period and discounted payback period.Your boss is very puzzled by the finance courses in his MBA program. He has learned that “cash flow is king,” but notices that the capital budgeting problems spend a lot of time and effort dealing with depreciation and ...Which of the following items, relating to working capital, would be considered a cash inflow or outflow when evaluating a project (and why)?a. Increase in inventoryb. Increase in accounts payablec. Increase in accounts ...You are trying to decide whether or not to go to graduate school. If you get a job right after you get your bachelor’s degree, you expect to earn $40,000 a year, and you expect your salary to increase by 5 percent a year ...GG Inc. has a project that requires purchases of capital assets costing $40,000 and additional raw material inventory of $2,000. Shipping and installation costs are $1,500. GG Inc. estimated that the project would generate ...Post your question