**Internal Rate of Return and Modified Internal Rate of Return**Quark Industries has three potential projects, all with an initial cost of $2,100,000. Given the discount rate and the future cash flow of each project in the following table, what are the IRRs and MIRRs of the three projects for Quark Industries? ### Cash Flow Analysis for Projects M, N, and O**Cash Flow Overview**This table presents the projected annual cash flows for three different projects, labeled as Project M, Project N, and Project O, over a period of five years. Additionally, it includes the discount rates applied to each project to evaluate their present value.#### Projected Cash Flows:- **Year 1:** - Project M: $500,000 - Project N: $700,000 - Project O: $1,100,000- **Year 2:** - Project M: $500,000 - Project N: $700,000 - Project O: $900,000- **Year 3:** - Project M: $500,000 - Project N: $700,000 - Project O: $700,000- **Year 4:** - Project M: $500,000 - Project N: $700,000 - Project O: $500,000- **Year 5:** - Project M: $500,000 - Project N: $700,000 - Project O: $300,000#### Discount Rates:- Project M: 7%- Project N: 12%- Project O: 15%This detailed layout provides a comparative view of the expected financial performance of each project, considering the future cash inflows. The discount rate for each project reflects the presumed risk and return expectations. This information is essential for conducting a comprehensive net present value (NPV) analysis, aiding in investment decisions based on the time value of money principles.

The given problem can be solved using IRR and MIRR function in excel.

Cash Flow Project M Project N Project O Year 1 $500,000 $700,000 $1,100,000 Year 2 $500,000 $700,000 $900,000 Year 3 $500,000 $700,000 $700,000 Year 4 $500,000 $700,000 $500,000 Year 5 $500,000 $700,000 $300,000 Discount rate 7% 12% 15%

Cash Flow Project M Project N Project O Year 1 $500,000 $700,000 $1,100,000 Year 2 $500,000 $700,000 $900,000 Year 3 $500,000 $700,000 $700,000 Year 4 $500,000 $700,000 $500,000 Year 5 $500,000 $700,000 $300,000 Discount rate 7% 12% 15%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Relevant Cash Flow Data for Year 2:Sales revenues Year 2 $100,000Cost of Goods Sold 20,000Depreciation Expense 10,000Tax Rate 40% Based on the above cash flow data: What is the operating cash flow for year two of this capital budgeting project? A.130,000 B.52,000 C.42,000 D. 78,000
NPV profiles WACC (Dollars in Millions) Plan A Plan B Project NPV Calculations: NPVA NPVB Project IRR Calculations: IRRA IRRB NPV Profiles: Discount Rates 0% 5% 10% 15% 20% 22% 25% 11.00% NPVA $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 0 -$40.00 Formulas #N/A #N/A -$11.00 $2.47 $2.47 $2.47 #N/A #N/A NPVB 1 $6.39 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2 3 $6.39 $6.39 4 $6.39 $2.47 5 6 7 $6.39 $6.39 $6.39 $2.47 $2.47 8 9 $6.39 $6.39 $2.47 $2.47 $2.47 10 $6.39 $2.47 11 $6.39 12 $6.39 13 $6.39 $2.47 $2.47 $2.47 14 $6.39 15 $6.39 $2.47 $2.47 16 $6.39 $6.39 $2.47 17 39 $2.47
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