Business, 03.12.2019 22:31 kanysh

Fuzzy button clothing company is analyzing a project that requires an investment of $3,225,000. the project’s expected cash flows are:

year

cash flow

year 1

$300,000

year 2

-200,000

year 3

$450,000

year 4

$500,000

fuzzy button clothing company’s wacc is 8%, and the project has the same risk as the firm’s average project. calculate this project’s modified internal rate of return (mirr).

a. 13.78%

b. -20.40

c.16.08%

d. 18.37%

2. if fuzzy button clothing company’s managers select projects based on the mirr criterion, they this independent project.

a. accept

b. reject

3. which of the following statements about the relationship between irr and the mirr is correct?

a. a typical firm’s irr will be greater than it’s mirr

b. a typical firm’s irr will be less than it’s mirr

c. a typical firm’s irr will be equal to it’s mirr

Answers: 2

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Fuzzy button clothing company is analyzing a project that requires an investment of $3,225,000. the...