Problem 10-19 Multiple Rates of Return

The Ulmer Uranium Company is deciding whether or not to open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2.

Plot the project's NPV profile.

Should the project be accepted if r = 8%? -Select-YesNoItem 2 Should the project be accepted if r = 14%? -Select-YesNoItem 3

What is the project's MIRR at r = 8%? Do not round intermediate calculations. Round your answer to two decimal places. % What is the project's MIRR at r = 14%? Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the two NPVs. Do not round intermediate calculations. Round your answers to the nearest cent.

1 $ 2 $

Does the MIRR method lead to the same accept-reject decision as the NPV method? -Select-YesNoItem 8

e. NPV(Millions of Dollars) lect- v -1 WN Discount Rate (%) 100 e accepted if r = 8%? A e accepted if r = 14%? 200 300 400 NPV(Millions of Dollars) effe 100 200 -1 Discount Rate (%) GROUP 24 B -5 300 400 S MIRR at r = 8%? Do not round intermediate calculations. Round your answer to two decimal places. E's MIRR at r = 14%? Do not round intermediate calculations. Round your answer to two decimal places. te NPV Millions of Dollars) NH O C 100 200 Discount Rate (%) 300 400 NPV(Millions of Dollars) N STE 54 and must be returned to its nate 100 200 Discount Rate (%) D 300 400