Solution :-
(A) The Project has 2 IRRs
(B)
Year | Cashflow | FVF @9.5% | PVF @ 9.5% | FV of +ve CF | PV of -ve CF |
0 | ($4.499) | 1.000 | ($4.50) | ||
1 | $3.490 | 1.313 | $4.582 | ||
2 | $3.490 | 1.199 | $4.185 | ||
3 | $3.490 | 1.095 | $3.822 | ||
4 | ($6.030) | 0.696 | ($4.20) | ||
TOTAL | $12.588 | ($8.696) |
MIRR = (FV of +ve CF / PV of -ve CF)1/n - 1
MIRR = (12.588 / 8.696)1/4 - 1
MIRR = (1.4476)1/4 - 1
MIRR = 1.09689 - 1 = 0.09689 = 9.69 %
(C)
Yes the Project should be taken because the MIRR > 9.5%
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