Question: Please use Microsoft Excel to show calculations. Please also demonstrate the necessary Excel commands to retrieve answers, thank you. Taylor Technologies has a target capital
Please use Microsoft Excel to show calculations. Please also demonstrate the necessary Excel commands to retrieve answers, thank you.
Taylor Technologies has a target capital structure which is 40 percent debt and 60 percent equity. The equity will be financed with retained earnings. The company's bonds have a yield to maturity of 10 percent. The company's stock has a beta = 1.1. The risk-free rate is 6 percent, the market risk premium is 5 percent, and the tax rate is 30 percent. The company is considering a project with the following cash flows:
| Year | Project A Cash Flow |
| 0 | -$50,000 |
| 1 | $35,000 |
| 2 | -$43,000 |
| 3 | $60,000 |
| 4 | $70,000 |
A. What is the Project's modified Internal rate of return (MIRR)? Should the project be accepted based on MIRR criteria?
B. What is the IRR for Project A? Why are IRR and MIRR different?
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