Question

Your firm is considering a project that will cost $4.593 million up front, generate cash flows of $3.52 million per year for 3 years, and then have a cleanup and shutdown cost of $6.01 million in the fourth year. a. How many IRRs does this project have? b. Calculate a modified IRR for this project assuming a discount and compounding rate of 9.9%. C. Using the MIRR and a cost of capital of 9.9%, would you take the project? a. How many IRRs does this project have? The project has IRRs. (Select from the drop-down menu.) b. Calculate a modified IRR for this project assuming a discount and compounding rate of 9.9%. The MIRR for this project is [ ]%. (Round to two decimal places ) c. Using the MIRR and a cost of capital of 9.9%, would you take the project? (Select from the drop-down menu) , the project should be taken because the MIRR > 9.9%
Answer all. Please quick thank you! Angels be with you.

Answer 1

SEE IMAGE

Go through it, Any doubts, please feel free to ask, Give positive feedback, Thank you

Tables Illustrations Charts Sparklines Filter Links AJ67 0 AJ AO AQ AS AK IT IS A CASE OF MIX INVESTMENTS. IN PURE INVESTMENTS, OUTFLOW OCCURS AT t 0 ONLY SECONDLY, NPV ALWAYS DECLINES AS RATE INCREASES HERE, THERE ARE 2 OUTFLOWS, SO NPV WILL FIRST DECREASES AND THEN INCREASES I HAVE USED A-3 TABLE, NO EXCEL FORMULAS SO 2 IRRs ARE THERE AL AM AN AP AR ANSWER 2

projects (Autosaved) Microsoft Excel Home ert Page Layout Formulas Data Review View dd-InsPOFescape Desktop Creator Σ AutoSum -9- wrap Text General ー E " ゴText B 1 u. ,_a. ars-函 a conditional aFor mat, sCll. Merge & Center. $ , % , Insert Delete Format Format Painter Formatting as Table Styles2 Clear Fe Select Clipboard AU65 AJ Editing AM AO AQ AS AU AV SO 2 IRRs ARE THERE ANSWER : 2 YEAR 66 YEAR PV FACTOR @4% PV FACTOR @ 10% 0 -4.593 1.0000 0.9615 0.9246 3 3.52 0.8890 0-4.593 1.0000 4.5930 1 3.52 0.9091 3.2000 2 3.52 0.8264 2.9091 3 3.52 0.7513 2.6446 4-6.010.6830 -4.1049 NPV PROFILE RATE NPV -4.5930 3.3846 3.2544 3.1293 5.1374 0.0379 3.52 3.52 0% -0.04 $ 0.06 $ 0.05 0.04 -0.06 S-0.15 -0.32 S-0.61 $-0.94 4 -6.010.8548 NPV0.0558 decreasin PV FACTOR @ 12% 73 YEAR PV FACTOR @8% 12% 20% YEAR 04.593 1.0000 0.9259 -4.5930 3.2593 3.0178 2.7943 4.4175 0.0609 increasin 0 4.593 1.0000 4.5930 1 3.52 0.8929 3.1429 3.52 0.7972 2.8061 3 3.52 0.7118 2.505s 4-6.01 0.6355 -3.8195 3.52 2 3.52 0.8573 3 352 0.7938 55% 100% 4 -6.010.7350 3.8614 increasin 0) NPV 4M MIRR NPV IRR REPLACEMENTS HPR GMAMEAC MACRSLEASE CASH BUDGET BOND EPS EBIT REPLACEMENT wacc bond sensitivity Sheet? STats NPV ED a4 ENG 15-042018 17:01 15-04-2018

projects (Autosaved) Microsoft Excel Home ert Page Layout Formulas Data Review View dd-InsPOFescape Desktop Creator Cut copy ▼ Format Painter Σ AutoSum ー E " ゴWrap Text ,_a. ars-函Merge & Center, $, % , 弼,8 C Paste B l u. Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear Sort &Find & Fe Select Clipboard Font Alignment Number Styles Cells Edting AY96 AM AN AO AP AQ AR AS AT AU AV AW AX AY 80 81 82 83 84 85 86 87 NPV S0.20 0.00 $-0.20 S-0.40 $-0.60 $-0.80 S-1.00 40% 60% 80% 100% 12096 NPV 89 90 91 92 93 94 95 96 97 /4 く トト1 | | MIRR NpV IRR REPLACEMENT S . .. HPR GMAM EAC MACRS /LEASE CASH BUDGET . BOND EPS EBIT , REPLACEMENT , wacc-bond sen Sheet? STats NPV E0 erences: E147 140% 15-04-2018

3 (b) MIRR @9.9% 10.08% (USED "MIRR" EXCEL FORMULA) (c) YES, PROJECT SHOULD BE ACCEPTED AS MIRR > COST OF CAPITAL MIRR NPV IRR REPLACEMENT S HPR GMAM EAC MACRS LEASE CASH