Compute the MIRR for Project Y and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 12 percent. $$\begin{array} { l l l l l l l }
\text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash flow: } & - 5000 & 1000 & 1000 & 0 & 2000 & 2000
\end{array}$$
A)7.62 percent, accept
B)7.62 percent, reject
C)47.09 percent, accept
D)47.09 percent, reject

Question

Compute the MIRR for Project Y and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 12 percent. $$\begin{array} { l l l l l l l } 
\text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \
\text { Cash flow: } & - 5000 & 1000 & 1000 & 0 & 2000 & 2000
\end{array}$$
A)7.62 percent, accept
B)7.62 percent, reject
C)47.09 percent, accept
D)47.09 percent, reject

Quizplus · Accepted Answer

The MIRR is 7.62 percent, which is less than the cost of capital of 12 percent, so the project should be rejected.