Compute the MIRR for Project Y and Accept or Reject $$\begin{array} { l l l l l l l } \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash flow: } & - 5000 & 1000 & 1000 & 0 & 2000 & 2000\end{array}$$

question 61

Multiple Choice

Compute the MIRR for Project Y and accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 12 percent. $$\begin{array} { l l l l l l l } \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash flow: } & - 5000 & 1000 & 1000 & 0 & 2000 & 2000\end{array}$$

• A)7.62 percent, accept
• B)7.62 percent, reject
• C)47.09 percent, accept
• D)47.09 percent, reject

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Definitions:

Annual Coupon

refers to the fixed interest payment that a bond issuer agrees to pay to the bondholder once every year until the bond's maturity date.

Zero-Coupon Bond

A bond that is issued at a discount to its face value but pays no interest; the investor's return is the difference between the purchase price and the face value at maturity.

Par Value

The face value of a bond or stock, representing the amount that the issuer agrees to pay at maturity or the nominal value assigned to a share of stock for accounting purposes.

Yield To Maturity

The total return anticipated on a bond if it is held until it matures, incorporating both interest payments and the increase or decrease in the bond's value to its face value at maturity.