Down Under Stores Is Considering an Investment with an Initial

question 86

Multiple Choice

Down Under Stores is considering an investment with an initial cost of $236,000.In Year 4,the project will require an additional investment and finally,the project will be shut down in Year 7.The annual cash flows for Years 1 to 7,respectively,are projected as $64,000,$87,000,$91,000,−$48,000,$122,000,$154,000,and −$30,000.If all negative cash flows are moved to Time 0 using a discount rate of 13 percent,what is the project's modified IRR?

• A)15.44 percent
• B)17.67 percent
• C)18.54 percent
• D)14.91 percent
• E)22.08 percent