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irakobra [83]
3 years ago
15

Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note t

hat a project's projected MIRR can be less than the WACC (and even negative), in which case it will be rejected.
Business
1 answer:
dolphi86 [110]3 years ago
8 0

Answer and Explanation:

The computation of the MIRR is shown below:

But before that terminal cash flow required to calculate

<u> Year       Cash Flows    FV Factor Formula      Terminal Value </u>

<u>                                                                       (Cash Flow × FV Factor) </u>

0             ($1,000)    

1               $450                 1.21                (1 +10%)^(2)      $545

2             $450                   1.1                 (1 + 10%)^(1)     $495

3            $450                   1                       1                 $450

Terminal Cash Flow                                                      $1,490

now the MIRR is

MIRR = \sqrt[n]{\frac{terminal\ cash\ flow}{initial\ investment} } - 1\\\\= \sqrt[3]{\frac{\$1,490}{\$1,000} } - 1

= 14.22%

As it can be seen that the MIRR is more than the WACC so the project should be accepted.

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Answer:

Readers' Corner

1. Effect of each transaction on the Inventory Balance:

a. $625,000 Purchase: Inventory balance is increased

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Explanation:

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olga55 [171]

Answer:

1-Communication is important to express oneself.

2-Need for effective leadership.

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4-Improve public Relationships.

5-Helps in providing the full information.

Explanation:

Good communication also improves relationships, and in your personal life with friends and family members. Listening carefully and offering quality feedback helps people to feel heard and understood. This, in turn, nurtures mutual respect. Communication is important to express oneself. It also satisfies one's needs. One should have effective communication for advancement in the career. In your personal life, effective communication skills can smooth your way and your relationships with others by helping you to understand others, and to be understood. Communication not only conveys information, but it encourages effort, modifies attitudes, and stimulates thinking

I hope it helps!

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Answer:

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