18) Find the Modified Internal Rate of Return (MIRR) for the following series of
ID: 2708517 • Letter: 1
Question
18) Find the Modified Internal Rate of Return (MIRR) for the following series of future cash flows, given a discount rate of 11%: Year 0: -$22,000; Year 1: $5,000; Year 2: $6,000; Year 3: $7,000; Year 4: $7,500; and, Year 5: $8,000.
A) About 13.12%
B) About 12.13%
C) About 13.04%
D) About 12.88%
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19) Dice, Inc. is considering a very risky five-year project that has an initial outlay or cost of $70,000. The future cash inflows from its project for years 1, 2, 3, 4, and 5 are all the same at $35,000. Dice uses the internal rate of return method to evaluate projects. Will Dice accept the project if its hurdle rate is 41.00%?
A) Dice will probably accept this project because its IRR is about 41.04%, which is slightly above its hurdle rate.
B) Dice will accept this project because its IRR is about 41.50%.
C) Dice will accept this project because its IRR is over 45.50%.
D) Dice will probably reject this project because its IRR is about 39.74%, which is slightly below its hurdle rate.
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20) The initial outlay or cost is $1,000,000 for a four-year project. The respective future cash inflows for years 1, 2, 3 and 4 are: $500,000, $300,000, $300,000 and $300,000. What is the payback period without discounting cash flows?
A) About 2.50 years
B) About 3.67 years
C) About 2.67 years
D) About 4.50 years
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21) Bacon Signs Inc., purchases a machine for $70,000. This machine qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%, etc. The firm has a tax rate of 40%. If the machine is sold at the end of two years for $50,000, what is the cash flow from disposal?
A) $50,000
B) $33,600
C) $43,440
D) $39,875
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22) The following information comes from the Galaxy Construction balance sheet. The value of common stock is $10,000, retained earnings equals $7,000, total common equity equals $17,000, preferred stock has a value of $3,000, and long-term debt totals $15,000. If the cost of debt is 8.00%, preferred stock has a cost of 10.00%, common stock has a cost of 12.00%,and the firm has a corporate tax rate of 30%, calculate the firm's WACC adjusted for taxes.
A) 10.00%
B) 9.09%
C) 10.11%
D) There is not enough information to answer this question.
PLEASE I NEED CORRECT ANSWERS ONLY
Explanation / Answer
18) Find the Modified Internal Rate of Return (MIRR) for the following series of future cash flows, given a discount rate of 11%: Year 0: -$22,000; Year 1: $5,000; Year 2: $6,000; Year 3: $7,000; Year 4: $7,500; and, Year 5: $8,000.
A) About 13.12%
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19) Dice, Inc. is considering a very risky five-year project that has an initial outlay or cost of $70,000. The future cash inflows from its project for years 1, 2, 3, 4, and 5 are all the same at $35,000. Dice uses the internal rate of return method to evaluate projects. Will Dice accept the project if its hurdle rate is 41.00%?
A) Dice will probably accept this project because its IRR is about 41.04%, which is slightly above its hurdle rate.
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20) The initial outlay or cost is $1,000,000 for a four-year project. The respective future cash inflows for years 1, 2, 3 and 4 are: $500,000, $300,000, $300,000 and $300,000. What is the payback period without discounting cash flows?
C) About 2.67 years
_________________________________________________________________________________________________
21) Bacon Signs Inc., purchases a machine for $70,000. This machine qualifies as a five-year recovery asset under MACRS with the fixed depreciation percentages as follows: year 1 = 20.00%; year 2 = 32.00%; year 3 = 19.20%; year 4 = 11.52%, etc. The firm has a tax rate of 40%. If the machine is sold at the end of two years for $50,000, what is the cash flow from disposal?
C) $43,440
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22) The following information comes from the Galaxy Construction balance sheet. The value of common stock is $10,000, retained earnings equals $7,000, total common equity equals $17,000, preferred stock has a value of $3,000, and long-term debt totals $15,000. If the cost of debt is 8.00%, preferred stock has a cost of 10.00%, common stock has a cost of 12.00%,and the firm has a corporate tax rate of 30%, calculate the firm's WACC adjusted for taxes.
B) 9.09%
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