Crystal Industries Is Considering an Expansion Project with Cash Flows

question 97

Multiple Choice

Crystal Industries is considering an expansion project with cash flows of −$287,500, $107,500, $196,100, $104,500, and −$92,700 for Years 0 through 4. Should the firm proceed with the expansion based on the discounting approach to the modified internal rate of return if the discount rate is 13.4 percent? Why or why not?

• A) No; The MIRR is 9.13 percent.
• B) No; The MIRR is 14.45 percent.
• C) Yes; The MIRR is 9.13 percent.
• D) No; The MIRR is 11.23 percent.
• E) Yes; The MIRR is 14.45 percent.

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Definitions:

Peer Influence

The effect that the attitudes, values, and behaviors of peers have on an individual's own attitudes and behaviors.

Role Confusion

A situation in which individuals are unsure about their identity or role within a specific context, often occurring during adolescence as described by Erik Erikson's stages of psychosocial development.

Identity

The distinguishing character or personality of an individual; how one sees oneself in relation to groups, society, and as an individual.

Basic Trust

An essential belief in the reliability and predictability of the world, typically developed during infancy.