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Category > Business & Finance Posted 31 May 2017 My Price 8.00

1. Fuzzy Button Clothing Company

1. Fuzzy Button Clothing Company is analyzing a project that requires an investment of $3,225,000. The projectAc€?cs expected cash flows are:

Year

Cash Flow

Year 1

$300,000

Year 2

-200,000

Year 3

$450,000

Year 4

$500,000

Fuzzy Button Clothing CompanyAc€?cs WACC is 8%, and the project has the same risk as the firmAc€?cs average project. Calculate this projectAc€?cs modified internal rate of return (MIRR).

a. 13.78%

b. -20.40

c.16.08%

d. 18.37%

2. If Fuzzy Button Clothing CompanyAc€?cs managers select projects based on the MIRR criterion, they ______, this independent project.

a. Accept

b. Reject

 

3. Which of the following statements about the relationship between IRR and the MIRR is correct?

a. A typical firmAc€?cs IRR will be greater than itAc€?cs MIRR

b. A typical firmAc€?cs IRR will be less than itAc€?cs MIRR

c. A typical firmAc€?cs IRR will be equal to itAc€?cs MIRR

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Homework Helper
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Status NEW Posted 31 May 2017 05:05 AM My Price 8.00

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