Your uncle just gave you some money to do with as you please. You have decided that you would like to purchase one established franchise in the fast foods area. You have narrowed your selection down to one choice: Franchise L: Lisa's Soups, Salads, & Stuffs. The net cash flows shown below include the price you would receive for selling the franchise in year 5 and the forecasts of how the franchise will do over the five-year period. Here are the project's estimated free cash flows (in thousands of dollars): Year Franchise L 0 ($120) 1 10 2 40 3 60 4 80 5 140 You also have concluded that the franchise has risk characteristics that require a return of 10% (capital cost). You must now determine whether the projects should be accepted. What is the MIRR for the project? Assume that the reinvestment rate is also equal to 10%. (5 marks) What is the discounted payback period for this franchise? (5 marks)

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To calculate the MIRR Modified Internal Rate of Return for the project ... View the full answer