Ehrmann Data Systems Is Considering a Project That Has the Following

question 14

Multiple Choice

Ehrmann Data Systems is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note that a project's projected MIRR can be less than the WACC (and even negative) , in which case it will be rejected.

• A) 9.32%
• B) 10.35%
• C) 11.50%
• D) 12.78%
• E) 14.20%

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Definitions:

Rational Investor

An investor who makes decisions based on factual information and logical evaluation to maximize returns and minimize risks.

Interest Rate

The fee, represented as a portion of the total amount borrowed, that a lender imposes on a borrower for utilizing funds.

Bond

A bond is a fixed income instrument that represents a loan made by an investor to a borrower, often used by companies, municipalities, states, and sovereign governments to finance projects and operations.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.