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disa [49]
3 years ago
7

Your company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $7,000 the first ye

ar, $9,000 the second year, $12,000 the third year, -$8,000 the fourth year, $19,000 the fifth year, $25,000 the sixth year, $28,000 the seventh year, and -$6,000 the eighth year. The project would cost the firm $47,300. If the firm's cost of capital is 18%, what is the modified internal rate of return
Business
1 answer:
Helga [31]3 years ago
6 0

Answer:

The modified internal rate of return is 15.67%.

Explanation:

Note: See the attached excel file for the calculation of the total present value of the after-tax cash flows.

From the attached excel file, we have:

Total present value of the after-tax cash flows = $40,332.66

The modified internal rate of return (MIRR) can be calculated using the following formula:

MIRR = (PV / Outlay)^(1/n) * (1 + r) - 1……………….. (2)

Where;

PV = Total present value of the after-tax cash flows = $40,332.66

Outlay = Absolute value of cost of the project = $47,300

r = cost of capital = 18%, or 0.18

n = number of years = 8

Substitute the values into equation (1) to have:

MIRR = ($40,332.66 / 47,300)^(1/8) * (1 + 0.18) - 1 =  0.1567, or 15.67%

Therefore, the modified internal rate of return is 15.67%.

Download xlsx
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Answer:

1. 12.25

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3. 25.75

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Explanation:

Po = Do (1 + g) /( Ke - g)

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Where = Ke = 8% , g= -2%

Po = 1.25(1 - 2%) / ( 8% + 2%)

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(2). Po =  Do (1 + g) /( Ke - g)

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Po = 1.25(1 + 0) / ( 8% - 0)

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Where = Ke = 8% , g= 3%

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(4) Po =  Do (1 + g) /( Ke - g)

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3 0
3 years ago
If total liabilities decreased by $26,185 during a period of time and owner's equity increased by $33,571 during the same period
matrenka [14]

Answer:

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Explanation:

Data provided in the question:

Change in total liabilities = - $26,185 [negative sign depicts decrease]

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Change in total assets = Change in total Liabilities + Change in total Equity

or

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5 0
3 years ago
Eva, the owner of eva's second time around wedding dresses, currently has five dresses to be altered, shown in the order in whic
AlladinOne [14]
The correct answer is 2.2 hours.

I<span>f Eva uses the earliest due date priority rule, the order of the dresses will be as follows: W (1 hour processing time, 1 hour due); Y (2 hrs processing time, 3 hrs due); V (3 hrs processing time, 5 hrs due); Z (5 hrs processing time, 7 hrs due); X (4 hrs processing time, 9 hrs due).</span> 

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This means that W and Y will be altered on time, V will be 1 hour late, Z will be 4 hours late, and X will be 6 hours late. To find the average tardiness, add these extra hours (1+4+6) = 11, and divide by the total number of dresses (even the ones that weren't late) 5: 11/5 = 2.2 hours.
8 0
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