1. Ehrmann Data Systems is considering a project that has the following cash flo

Question

1. Ehrmann Data 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.

WACC:

8.75%

Year

0

1

2

3

Cash flows

-$1,000

$450

$450

$450

13.74%

11.41%

14.16%

12.23%

WACC:

6.25%

0

1

2

3

4

CFS

-$1,100

$550

$600

$100

$100

CFL

-$2,700

$650

$725

$800

$1,400

$200.16

$170.97

$208.50

$185.57

$241.86

WACC:

8.75%

Year

0

1

2

3

Cash flows

-$1,000

$450

$450

$450

Explanation / Answer

true answer is 1)D 2)A

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