Compute the MIRR Statistic for Project J and Advise Whether

question 31

Multiple Choice

Compute the MIRR statistic for Project J and advise whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.
Project J
$$\begin{array} { l l l c c c c } \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash Flow } & - \$ 1,000 & \$ 300 & \$ 1,480 & - \$ 500 & \$ 300 & - \$ 100\end{array}$$

• A) The project's MIRR is 14.77 percent and the project should be accepted.
• B) The project's MIRR is 9.29 percent and the project should be rejected.
• C) The project's MIRR is 13.76 percent and the project should be accepted.
• D) The project's MIRR is 15.31 percent and the project should be accepted.

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Definitions:

Saving And Investment

The act of foregoing current consumption to put resources into assets or projects expected to generate future benefits or returns.

Loanable Funds

A term used in economics to describe the market where savers supply funds to borrowers, typically characterized by the interest rate.

Saving

The act of setting aside a portion of current income for future use, which could involve depositing money into bank accounts or investing in financial products.

Investment

Assigning funds with the anticipation of creating income or achieving financial gain.