Project X has a cost of capital of 8 percent and the following cash flows: investment of

Question:

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?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...