Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 8 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the MIRR decision to evaluate this project; should it be accepted or rejected?
A) MIRR = 13.59 percent; accept the project
B) MIRR = 7.96 percent; reject the project
C) MIRR = 7.19 percent; reject the project
D) MIRR = 12.58 percent; accept the project

Question

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 8 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the MIRR decision to evaluate this project; should it be accepted or rejected? 
A) MIRR = 13.59 percent; accept the project 
B) MIRR = 7.96 percent; reject the project 
C) MIRR = 7.19 percent; reject the project 
D) MIRR = 12.58 percent; accept the project

Quizplus · Accepted Answer

Step 1: Find the FV of all positive cash flows: FV = 10,737.65;
Step 2: PV = −5,000; PMT = 0; N = 6; FV = 10,737.65; I = MIRR = 13.59 percent

Suppose Your Firm Is Considering Investing in a Project with the Cash