A Project Has a Series of Non-Normal Cash Flows That

question 25

Multiple Choice

A project has a series of non-normal cash flows that result in a terminal value (TV) of $121,900 in 6 years.If the project's initial costs are $50,000,what is your recommendation regarding this project to management (accept/reject) ?

• A)accept as the MIRR is 12%
• B)reject as the MIRR is greater than zero
• C)accept as the terminal value is greater than the present value of the costs
• D)accept as the MIRR is 16.00%

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Definitions:

Break-even Point

The stage at which total revenues equal total costs, resulting in neither profit nor loss for the business.

Picture Frame Store

A retail shop specializing in selling frames for artwork, photographs, and other decorative wall hangings.

Break-even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.

Unit Variable Costs

The costs that vary directly with the level of production or output.