Compute the MIRR Statistic for Project I and Note Whether

question 17

Multiple Choice

Compute the MIRR statistic for Project I and note whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 15 percent.Project I $$\begin{array} { | r | l | l | l | l | l | l | } \hline \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash Flow } & - \$ 1,000 & \$ 400 & \$ 300 & \$ 200 & \$ 300 & \$ 50 \\\hline\end{array}$$

• A)The project's MIRR is 10.29 percent and the project should be rejected.
• B)The project's MIRR is 12.67 percent and the project should be rejected.
• C)The project's MIRR is 17.17 percent and the project should be accepted.
• D)The project's MIRR is 18.19 percent and the project should be accepteD. \[\begin{array} { | l | l | l | l | l | l | l | }
• \hline \text { Year } & 0 & 1 & 2 & 3 & 4 & 5 \\
• \hline \text { Cash Flow } & - \$ 1,000 & \$ 400 & \$ 300 & \$ 200 & \$ 300 & \$ 50 \\
• \hline \begin{array} { l }
• \text { Future } \\
• \text { Value (If } \\
• \text { Positive) }
• \end{array} & & 699.60 & 456.26 & 264.50 & 345.00 & \$ 50 \\
• \hline \text { Sum of FV } & & & & & & \$ 1,815.36 \\
• \hline \begin{array} { l }
• \text { Modified } \\
• \text { CFs }
• \end{array} & - \$ 1,000 & & & & & \$ 1,815.36 \\
• \hline
• \end{array}\]

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Definitions:

Alternatives Being Considered

The different options or strategies under evaluation to address a particular issue or to achieve a specific goal.

Opportunity Cost

The cost of choosing one option over another, representing the value of the foregone alternative.

Five-Day Workweek

The standard work schedule that involves working five days per week, typically Monday through Friday, with two days off.

Variable Manufacturing Costs

Variable manufacturing costs are expenses that change in proportion with the level of production output, such as raw materials and labor.