Suppose a firm has the following cash flows associated with a project (due to the expenses...

 

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Suppose a firm has the following cash flows associated with a project (due to the expenses of cleaning up the site and winding down operations at the end of the project). Due to the existence of multiple IRRs, you cannot use IRR to determine if the project should be undertaken. Calculate the MIRR (Modified Internal Rate of Return) for the project, assuming efin = 6% and einv= 12%. Is this project justified? Year 0 1 2 3 Cash Flow -$5,000 $20,000 -$12,000 -$3,000 Suppose a firm has the following cash flows associated with a project (due to the expenses of cleaning up the site and winding down operations at the end of the project). Due to the existence of multiple IRRs, you cannot use IRR to determine if the project should be undertaken. Calculate the MIRR (Modified Internal Rate of Return) for the project, assuming efin = 6% and einv= 12%. Is this project justified? Year 0 1 2 3 Cash Flow -$5,000 $20,000 -$12,000 -$3,000

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To calculate the Modified Internal Rate of Return MIRR we need to find the terminal value of the cas... View the full answer