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timofeeve [1]
3 years ago
11

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.
WACC: 9%
Year 0 1 2 3
Cash flows -$1,000 $450 $450 $450

a. 13.70%
b. 13.84%
c. 13.28%
d. 17.29%
e. 14.53%
Business
1 answer:
jeka943 years ago
6 0

Answer:

the project's MIRR is 13.84 %

Explanation:

MODIFIED INTERNAL RATE OF RETURN (MIRR)

-It is the rate that causes the Present Value of the Terminal Value (Future Cash flows at the end of the Project) to equal Present Value of Cash outflows.

-MIRR assumes a reinvestment rate at the end of the project

The First Step is to Calculate the Terminal Value at end of year 3.

Terminal Value (FV) = Sum of (PV x (1 + r) ^ 3 - n)

                   = $450 x (1.09) ^ 2 + $450 x (1.09) ^ 1 + $450 x (1.09) ^ 0

                   = $534.65 + $490.50 + $450.00

                   = $1,475.15

The Next Step is to Calculate the MIRR using a Financial Calculator :

(-$1,000)          CFj

0           CFj

0           CFj

$1,475.15   CFj

Shift IRR/Yr 13.84 %

Therefore, the project's MIRR is 13.84 %.

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7 0
3 years ago
Vito is the sole shareholder of Vito, Inc. He is also employed by the corporation. On June 30, 2020, Vito borrowed $8,000 from V
otez555 [7]

Answer:

The first loan for $8,000 could fall under the exemption of employer-employee loan. But then after the second is taken, that exemption would no longer apply. A minimum interest of $18,000 x 4% x 6/12 = $360 should be charged.

If the loan is considered a corporation-shareholder loan, then it doesn't qualify for any type of exemption, resulting in interests = ($8,000 x 4% x 6/12) = $160 for 2020

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3 0
2 years ago
Which of the following is a characteristic of both the sales approach for service-type warranties and the expense approach for a
user100 [1]

Answer: Unearned warranty revenue

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It should be noted that the unearned warranty revenue is a characteristic of both the sales approach for service-type warranties and the expense approach for assurance-type warranties.

3 0
3 years ago
If a painter tells you that he would spent $30 on a resperator (but not $31) that protects him from paint fumes that produce a 0
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Explanation:

Data provided in the question:

Amount the painter would like to spend on a respirator = $30

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3 0
3 years ago
(Scenario: Assets and Liabilities of the Banking System) According to the Scenario: Assets and Liabilities of the Banking System
Phantasy [73]

If the banking system does NOT want to hold any excess reserves,  $250,000 will be <u>added </u>to the money supply.

<h3>What is an excess reserves?</h3>

Excess reserves is known to be the capital reserves that is said to be held by a bank or financial institution and it is one that is too much or is in excess of what is needed by regulators, creditors, or others.

Since there is  $25,000 worth of U.S. Treasury bills, one will multiply it times 10 = $250,000

Therefore,  If the banking system does NOT want to hold any excess reserves,  $250,000 will be <u>added </u>to the money supply.

Learn more about excess reserves from

brainly.com/question/17099821

#SPJ12

7 0
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