11.15b (Calculating MIRR) OTR Trucking runs afleet of long-haul trucks and has recentlyexpanded into the Midwest, where it has decidedto build a maintenance facility. This project willrequire an initial cash outlay of $20 million and willgenerate annual cash inflows of $4.5 million peryear for Years 1 through 3. In Year 4, the projectwill provide a net negative cash flow of $5,000,000due to anticipated expansion of and repairs to thefacility. During Years 5 through 10, the project willprovide cash inflows of $2 million per year. b.Calculate the project's MIRR. Is the project aworthwhile investment based on this measure?Why or why not? NOT EXCEL IN FOMULA

Step 1:let's calculate the Modified Internal Rate of Return (MIRR) for OTR Trucking's maintenance…

Answered: 11.15b (Calculating MIRR) OTR Trucking…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter12: Capital Investment Decisions

Section: Chapter Questions

Problem 21BEA

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(Calculating MIRR) OTR Trucking Company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project will require an initial cash outlay of $18.5 million and will generate annual cash inflows of $4.2 million per year for Years 1 through 3. In Year 4, the project will provide a net negative cash flow of $5.5 million due to anticipated expansion of and repairs to the facility. During Years 5 through 10, the project will provide cash inflows of $1.4 million per year. a. Calculate the project's NPV and IRR where the discount rate is 11 percent. Is the project a worthwhile investment based on these two measures? Why or why not? b. Calculate the project's MIRR. Is the project a worthwhile investment based on this measure? Why or why not?
Calculating MIRR OTR Trucking company runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project will require an initial cash outlay of 20.5 million and will generate annual cash flows of $3.5 million per year for years 1 through 3. In year 4, the project will provide a net negative cash flow of $5.8 million due to anticipated expansion of and repairs to the facility. During years 5 through 10 the project will provide cash inflows of $1.4 million per year calculate the projects NPV and IRR where the discount rate is 11 percent is the project a worthwhile investment based on these two measures? Why or why not? calculate the projects MIRR is the project a worthwhile investment based on this measure? Why or why not?
A6
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17
What is the expected operating cash flow for year 2 of a project given the following information. To undertake the project, $321,000 must be spent on new equipment. The equipment has an expected life of 7 years and will be depreciated straight- line over that same period to a book value of 0. New annual sales of $211,000 are expected (expected sales are the same each year). Cost of goods sold are projected to be 44% of sales, Fixed cash operating expenses are $46,000 per year. Tax rate is 26%, in the event EBIT is negative, the firm would have a tax credit based on the 26% tax rate. O a. 78385.51 Ob. 65321.26 Oe. 64862.69 Od. 68135.92 O e. 82304.78 Of. 54216.64
Hh1. Account
16. A 6-year project is expected to generate annual sales of 8,900 units at a price of $76 per unit and a variable cost of $47 per unit. The equipment necessary for the project will cost $317,000 and will be depreciated on a straight-line basis over the life of the project. Fixed costs are $190,000 per year and the tax rate is 25 percent. How sensitive is the operating cash flow to a $1 change in the per unit sales price? $4,609 $6,007 $4,142 $5,075 $6,675
D1.
(Calculating IRR, payback, and a missing cash flow) The Merriweather Printing Company is trying to decide on the merits of constructing a new publishing facility. The project is expected to provide a series of positive cash flows for each of the next four years. The estimated cash flows associated with this project are as follows: Year Project Cash Flow $760,000 390,000 290,000 450,000 (Click on the icon O in order to copy its contents into a spreadsheet.) 2 3 4 If you know that the project has a regular payback of 2.1 years, what is the project's IRR? The IRR of the project is %. (Round to two decimal places.)
Calculating IRR, payback and a missing cash flow. the merrieeather printing company is trying to decide on the merits of constructing a new publishing facility. The project is expected to provide a series of positive cash flows for the next four years. The estimated cash flows associated with this project are as follows: year Project cash flow 0. ? 1. $770,000 2. $350,000 3. $260,000 4. $470,000 if you know that the project has a regular payback of 2.8 year, what is the project's IRR? what is the initial investment of the project
(Calculating IRR, payback, and a missing cash flow) The Merriweather Printing Company is trying to decide on the merits of constructing a new publishing facility. The project is expected to provide a series of positive cash flows for each of the next four years. The estimated cash flows associated with this project are as follows: Year Project Cash Flow ed 1 $760,000 390,000 3 290,000 450,000 (Click on the icon in order to copy its contents into a spreadsheet.) If you know that the project has a regular payback of 2.1 years, what is the project's IRR? stion The IRR of the project is %. (Round to two decimal places.) stion le estion urse (Busin of Use Priv Enter your answer in the answer box and then click Check Answer. Final Check Clear All All parts showing 99+ 近

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