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Canal Authority is evaluating a new project and has estimated the following cash flows: Year 0...

Canal Authority is evaluating a new project and has estimated the following cash flows:

Year 0 = -$2,478,000 Year 1 = $1,389,000 Year 2 = $1,076,000 Year 3 = $876,000 Canal Authority’s cost of capital is 12%.

Calculate the following:

1. NPV

2. IRR

3. MIRR

4. Indicate whether the Canal Authority should accept or reject this project.

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Answer #1

YEAR cash flows -$2,478,000 $1,389,000 $1,076,000 $876,000 18.14% IRR(B3:36) 1 5.55% MIRR(B3:16,12%,12%) pv @ 12% 1.0000 0.89

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