Turner Enterprises is analyzing a project that is expected to have annual cash flows of $77,400,$21,300 and -$6,200 for Years 1 to 3,respectively.The initial cash outlay is $84,900 and the discount rate is 11 percent.What is the modified IRR?
A)7.77%
B)8.13%
C)8.26%
D)8.67%
E)8.79%

Question

Quizplus · Accepted Answer

Modified Year 2 cash flow = $21,300 + (-$6,200)/1.11 = $15,714.41Modified IRR: $0 = -$84,900 + $77,400/(1 + IRR)+ $15,714.41/(1 + IRR)² = 8.26%

Turner Enterprises Is Analyzing a Project That Is Expected to Have