A project is expected to generate the following cash flows: Year Project after-tax cash flows -$350 150 -25 300 The project's cost of capital is 10%, calculate this project’s MIRR.
MIRR = ( FVc / PVfc )1/n -1
where, FVc is the future value of positive cash flows
and PVfc is the present value of negative cash flows
Cost of Capital = r = 10%
CF0 = -350
CF1 = 150
CF2 = -25
CF3 = 300
PVfc = CF0 + CF2/(1+r)2 = 350 + 25/(1+0.10)2 = $370.66
FVc = CF1(1+r)2 + CF3 = 150(1+0.10)2 + 300 = $481.5
Hence, MIRR = (481.5/370.66)1/3 - 1 = 0.0911 = 9.11%
A project is expected to generate the following cash flows: Year Project after-tax cash flows -$350...
question #8 A project is expected to generate the following cash flows: Year Project after-tax cash flows on nimi -$350 150 -25 300 The project's cost of capital is 10%, calculate this project's MIRR. Fill in the blank
The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project’s IRR. 4. Modified internal rate of return (MIRR) The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the...
Question 3 W Project Boyaz is expected to generate $24,000 each year for the next four years. It will cost $60,000 to implement the project today. If the project's required rate of return is 12%, what is its internal rate of return? 11.59% 14.40% 18.93% 21.86% Question 5 10 points Save Answer Deckland Corp. is considering a new project that will cost $250,000 to implement. If accepted, it will generate after-tax cash flows of $60,000 in year one, $100,000 in...
you are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $84k at the end of each of yhe next five years, plus an additional $1,000k at the end of the fifth year as the final cash flow. you can purchase this project for $608 k. if your firms cost of capital (aka required rate of return) is 12.5% what is the NPV of this project?
The IRR evaluation method assumes that cash flows from the project are reinvested at a rate equal to the project’s IRR. However, in reality, the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, using the modified IRR approach, you can make a more reasonable estimate of a project’s rate of return than the project’s IRR can. Consider the following situation: Green Caterpillar Garden Supplies Inc. is analyzing a project that requires an initial investment...
You are evaluating purchasing the rights to a project that will generate after tax expected cash flows of $96k at the end of each of the next five years, plus an additional $1,000k at the end of the fifth year as the final cash flow. You can purchase this project for $509k. If your firm's cost of capital (aka required rate of return) is 15.8%, what is the NPV of this project? Provide your answer in units of $1000, thus,...
Calculate the net present value for a five-year project that is expected to generate after-tax cash inflows of R 26,000 annually. The initial investment is R 80,000. Management estimates the firm's cost of capital is 14 percent. a) R 9,253.00 b) R 1,130.00 c) R 4,005.00 d) None of the above
The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Green Caterpillar Garden Supplies Inc. is analyzing a project that requires an initial investment of $500,000. The project's expected cash flows are: Year...
The IRR evaluation method assumes that cash flows from the project are reinvested at the same rate equal to the IRR. However, in reality the reinvested cash flows may not necessarily generate a return equal to the IRR. Thus, the modified IRR approach makes a more reasonable assumption other than the project's IRR. Consider the following situation: Celestial Crane Cosmetics is analyzing a project that requires an initial investment of $500,000. The project's expected cash flows are: Year Year 1...
Project PRC is expected to generate net cash flows of $8,200 a year for three years. If the appropriate cost of capital is 10%, what is the maximum amount one should be willing to invest in this project?