Problem 9-19 MIRR [LO6]Duo Corporation is evaluating a project with the following cash flows:YearCash Flow0-$ 29,1001234511,30014,00015,90013,000-9,500The 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 roundintermediate calculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)b. Calculate the MIRR of the project using the reinvestment approach. (Do not roundintermediate calculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)c. Calculate the MIRR of the project using the combination approach. (Do not roundintermediate calculations and enter your answer as a percent rounded to 2decimal places, e.g., 32.16.)Answer is complete but not entirely correct.a. Discounting approach MIRR11.19 %b. Reinvestment approach MIRR11.19%c. Combination approach MIRR13.02%

1: Discounting approach - here future outflows are discounted to present and then added to CF0 2:…

Answered: Problem 9-19 MIRR [LO6] Duo Corporation…

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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Problem 8-8 Payback (LO4) The following are the cash flows of two projects: Year Project A $ (380) Project B $ (380) 0 210 280 210 280 210 280 210 1234 4 What is the payback period of each project? Note: Round your answers to 1 decimal place. Project A B Payback Period years years
Problem 9-16 Problems with Profitability Index [LO1, 7] The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Vear Cash Flow (0) Cash Flow ( -24 63,000 32,000 32,000 32,000 -$ 18,100 9,750 9,750 9,750 3 a-1.If the required return is 11 percent, what is the profitability index for both projects? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) Project I Project I| a- If the company applies the profitability index decision rule, which project should the 2. firm accept? O ProjectI O Project I b- What is the NPV for both projects? (A negative answer should be indicated by a 1. minus sign. Do not round Intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project i Project I b- if the company applies the NPV decision rule, which project should it take? 2. Project I O Project I
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:55 Alpha Company is considering a project with the following cash flows: • Year 0 = (14,800) • Year 16,100 . Year 2= 7,400 • Year 3 = 5,100 • Year 4 = 4,700 What is the payback period?
Problem 9-34 (Algo) Yield on Investment [LO9-4] C. D. Rom has just given an insurance company $46,500. In return, he will receive an annuity of $6,600 for 20 years. At what rate of return must the insurance company invest this $46,500 in order to make the annual payments? Use Appendix D for an approximate answer, but calculate your final answer using the financial calculator method. Note: Do not round Intermediate calculations. Round your final answer to 2 decimal places. Rate of return 6.35 %
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