Edelman Electric Systems Is Considering a Project That Has the Following

question 45

Multiple Choice

Edelman Electric Systems is considering a project that has the following cash flow and WACC data.What is the project's MIRR? Note that a project's projected MIRR can be less than the WACC (and even negative) ,in which case it will be rejected. $\begin{array}{lcccc}\text { WACC: } & 10.00 \% \\\text { Year: } & 0 & 1 & 2 & 3 \\\hline \text { Cash flows: } & -\$ 800 & \$ 350 & \$ 350 & \$ 350\end{array}$

• A)9.58%
• B)10.64%
• C)11.82%
• D)13.14%

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Definitions:

Tax Value

The value assigned to an asset, liability, or transaction for the purpose of calculating taxes owed, which may differ from book or market values.

Carrying Value

The book value of an asset or liability on the balance sheet, calculated as the original cost minus depreciation or impairment.

Fair Value

The financial sum expected to be received for an asset's sale or needed to transfer a liability, within a systematic deal involving market entities, on the date it is assessed.

Goodwill

The intangible asset that arises when a company acquires another business for a price higher than the fair value of its net identifiable assets.