Blue Water Systems Is Analyzing a Project with the Following

question 45

Multiple Choice

Blue Water Systems is analyzing a project with the following cash flows.Should this project be accepted based on the discounting approach to the modified internal rate of return if the discount rate is 14 percent? Why or why not?

• A) Yes;The MIRR is 13.48 percent.
• B) Yes;The MIRR is 17.85 percent.
• C) Yes;The MIRR is 21.23 percent.
• D) No;The MIRR is 5.73 percent.
• E) No;The MIRR is 17.85 percent.

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Definitions:

Marginal Tax Rates

The rate at which an additional dollar of income is taxed, showing the percentage of tax applied to your income for each tax bracket you pass through.

Laffer Curve

A theoretical representation of the relationship between tax rates and government revenue, suggesting there is an optimal tax rate that maximizes revenue.

Tax Revenue

The financial earnings that governments obtain through taxation.

Price Ceiling

A legally imposed limit on the price that can be charged for a good or service.