Duo Corporation is evaluating a project with the following cash flows: Year ܘ ܝ ܢ ܚ ܟ ܗ 2 3 4 Cash Flow -$ 28,100 10,300 13,000 14,900 12,000 -8,500 The company uses an interest rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
Duo Corporation is evaluating a project with the following cash flows: Year ܘ ܝ ܢ ܚ ܟ ܗ 2 3 4 Cash Flow -$ 28,100 10,300 13,000 14,900 12,000 -8,500 The company uses an interest rate of 8 percent on all of its projects. a. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Discounting approach MIRR b. Reinvestment approach MIRR c. Combination approach MIRR % % %
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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Question
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Duo Corporation is evaluating a project with the following cash flows:
Cash Flow
-$ 28,100
10,300
13,000
14,900
12,000
-8,500
Year
012345
The company uses an interest rate of 8 percent on all of its projects.
a. Calculate the MIRR of the project using the discounting approach. (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b. Calculate the MIRR of the project using the reinvestment approach. (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
c. Calculate the MIRR of the project using the combination approach. (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
a. Discounting approach MIRR
b. Reinvestment approach MIRR
c. Combination approach MIRR
%
%
%
Transcribed Image Text:11
5
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18
Hint
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erences
Year
0
1
2
3
Cash Flow
-$ 18,500
10,800
9,700
6,200
a. What is the profitability index for the set of cash flows if the relevant discount rate is 9
percent? (Do not round intermediate calculations and round your answer to 3
decimal places, e.g., 32.161.)
b. What is the profitability index for the set of cash flows if the relevant discount rate is 14
percent? (Do not round intermediate calculations and round your answer to 3
decimal places, e.g., 32.161.)
c. What is the profitability index for the set of cash flows if the relevant discount rate is 21
percent? (Do not round intermediate calculations and round your answer to 3
decimal places, e.g., 32.161.)
a. Profitability index
b. Profitability index
c. Profitability index
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Step 1: Calculate the MIRR of the project using the discounting approach as follows:
VIEWStep 2: Calculate the MIRR of the project using the reinvestment approach as follows:
VIEWStep 3: Calculate the MIRR of the project using the combination approach as follows:
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