Frazier Fudge Has a Project with an Initial Outlay of $40,000,followed

question 9

Multiple Choice

Frazier Fudge has a project with an initial outlay of $40,000,followed by three years of annual incremental cash flows of $35,000.At the end of the third year,equipment will be sold producing additional cash flow of $10,000.Assuming a cost of capital of 10%,calculate the MIRR of the project.

• A)46.5%
• B)51.3%
• C)62.9%
• D)74.7%

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Definitions:

Compounded Annually

Interest calculated on the initial principal and the accumulated interest from the past year added together once per year.

Term Deposit

A type of bank deposit that has a fixed term and typically offers a higher interest rate than a regular savings account.

Interest Rate

The percentage of a sum of money charged for its use.

Original Principal

The initial amount of money borrowed or invested before any interest or earnings are applied.