Blue Water Systems Is Analyzing a Project with the Following

question 31

Multiple Choice

Blue Water Systems is analyzing a project with the following cash flows.Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent? Why or why not?

• A)Yes; The MIRR is 13.48 percent.
• B)Yes; The MIRR is 17.85 percent.
• C)Yes; The MIRR is 21.23 percent.
• D)No; The MIRR is 5.73 percent.
• E)No; The MIRR is 17.85 percent.

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Definitions:

Finished Goods

Items that are finished being made but have not been purchased by consumers yet.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods that a company sold during a specific period.

Direct Labor Hours

The total hours of labor directly involved in producing goods or providing services, used in calculating labor costs and efficiency.

Period Costs

Expenses on the income statement not directly tied to the production of goods, such as administrative and selling expenses.