Home Décor & More Is Considering a Proposed Project with the Following

question 13

Multiple Choice

Home Décor & More is considering a proposed project with the following cash flows.Should this project be accepted based on the combination approach to the modified internal rate of return if both the discount rate and the reinvestment rate are 16 percent? Why or why not? $$\begin{array} { c c } \underline { \text { Year } } & { \text { Cash Flow } } \\\hline 0 & - \$ 375,000 \\1 & 133,500 \\2 & - 35,600 \\3 & 244,700 \\4 & 271,000\end{array}$$

• A)Yes; The MIRR is 14.78 percent.
• B)Yes; The MIRR is 17.42 percent.
• C)No; The MIRR is 12.91 percent.
• D)No; The MIRR is 14.78 percent.
• E)No; The MIRR is 17.42 percent.

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Definitions:

Near Future

A short period of time immediately ahead in which events are expected to occur.

Actual Value

The real, measured, or observed value of a quantity as opposed to an estimated or predicted value.

Forecast Value

The estimated value of a variable or outcome at a future point in time based on historical data and analysis.

Delphi Method

A structured communication technique that relies on a panel of experts to forecast or make decisions through rounds of anonymous surveys.