Florida Phosphate Is Considering a Project Which Involves Opening a New

question 41

Multiple Choice

Florida Phosphate is considering a project which involves opening a new mine at a cost of $10,000,000 at t = 0. The project is expected to have operating cash flows of $5,000,000 at the end of each of the next 4 years. However, the facility will have to be repaired at a cost of $6,000,000 at the end of the second year. Thus, at the end of Year 2 there will be a $5,000,000 operating cash inflow and an outflow of -$6,000,000 for repairs. The company's cost of capital is 15 percent. What is the difference between the project's MIRR and its regular IRR?

• A) 0.00%
• B) 0.51%
• C) 3.40%
• D) 9.65%
• E) 13.78%

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Definitions:

Generalized Belief

A widely held opinion or conviction that is not specific to a particular instance but applies across many situations.

Group Polarization

The tendency for a group to make decisions that are more extreme than the initial inclination of its members after discussing an issue.

Health Care

The organized provision of medical services to individuals or communities to maintain or improve health.

Communication

The exchange of information, ideas, or feelings between individuals or groups, typically involving speech, writing, or gestures.