Compute the MIRR Statistic for Project J and Advise Whether

question 70

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

• 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.Using a financial calculator: PV = -1437.75; FV = 2739.11; N = 5; PMT = 0; I = MIRR = 13.76 percent; Accept since MIRR> Cost of capital.

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Definitions:

Compounded Monthly

This involves determining the interest amount by considering the initial principal and the interest it has generated in preceding months, with calculations made monthly.

Month-end Withdrawals

Financial transactions where funds are taken out of an account at the end of the month.

Ordinary Annuity

Regular equivalent deposits made upon the completion of each period over a specified span.

Compounded Monthly

Interest calculation method where the interest is added back to the principal each month, leading to an increase in the interest earned in subsequent periods.