Ehrmann Data Systems Is Considering a Project That Has the Following

question 72

Short Answer

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. WACC: $\quad 10.00 \%$
$\begin{array}{c}\begin{array}{lll} \text {Year}\\\text {Cash flows}\end{array}\begin{array}{c} 0 \\\hline -\$1,000\end{array}\begin{array}{c}1 \\\hline \$450\end{array}\begin{array}{c}2 \\\hline \$450\end{array}\begin{array}{c}3 \\\hline \$450\end{array}\end{array}$

a. $9.32 \%$
b. $10.35 \%$
c. $11.50 \%$
d. $12.78 \%$
e. $14.20 \%$

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Definitions:

High-Risk Situations

Circumstances or environments that have a greater likelihood of leading to harm or negative outcomes.

Behavioral and Cognitive

Pertaining to the psychological approaches that focus on altering negative behaviors and thought patterns.

Avoidance

A behavioral or psychological strategy of keeping away from certain situations, thoughts, or feelings that cause distress.

Approach

A method or way of dealing with a problem or task.