Compute the MIRR Statistic for Project J and Advise Whether

question 11

Multiple Choice

Compute the MIRR statistic for Project J and advise whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.Project J $$\begin{array} { | r | l | l | l | l | l | l | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash Flow } & - \$ 1,000 & \$ 300 & \$ 1,480 & - \$ 500 & \$ 300 & - \$ 100 \\\hline\end{array}$$

• A)The project's MIRR is 14.77 percent and the project should be accepted.
• B)The project's MIRR is 9.29 percent and the project should be rejected.
• C)The project's MIRR is 13.76 percent and the project should be accepted.
• D)The project's MIRR is 15.31 percent and the project should be accepteD. \[\begin{array} { | l | l | l | l | l | l | l | }
• \hline \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \\
• \hline \text { Cash Flow } & - \$ 1,000 & \$ 300 & \$ 1,480 & - \$ 500 & \$ 300 & - \$ 100 \\
• \hline \begin{array} { l }
• \text { Present } \\
• \text { Value (If } \\
• \text { Negative) }
• \end{array} & - \$ 1,000 & & & - 375.66 & & - 62.09 \\
• \hline \text { Sum of PV } & - \$ 1,437.75 & & & & & \\
• \hline \begin{array} { l }
• \text { Future } \\
• \text { Value (If } \\
• \text { Positive) }
• \end{array} & & 439.23 & 1969.88 & & 330.00 & \\
• \hline \text { Sum of FV } & & & & & & \$ 2.739 .11 \\
• \hline \begin{array} { l }
• \text { Modified } \\
• \text { CFs }
• \end{array} & - \$ 1,437.75 & & & & & \$ 2.739 .11 \\
• \hline
• \end{array}\]

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Definitions:

Service Fees

Charges for professional services provided by businesses to their customers.

Rent Expense

The cost incurred by a business to utilize property or equipment for business operations.

Revenue Closed

A term not commonly used in accounting standards. NO.

Owner's Capital

The amount of money and other assets invested in a business by its owner(s), which represents the owner’s claim against the company's assets.