Question: Your company is considering a project with an initial outlay of $10,000 in year zero and the following cash flows over the next 4 years:

Your company is considering a project with an initial outlay of $10,000 in year zero and the following cash flows over the next 4 years:

Year

Cash flow

1

2,000

2

3,000

3

4,000

4

5,000

Assuming cost of capital is 11%:

1) The project's Modified Internal Rate of Return is:

12.24%

12.50%

0%

11%

13.00%

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