The Caffeine Coffee Company uses the modified internal rate of return. The firm

Question

The Caffeine Coffee Company uses the modified internal rate of return. The firm has a cost of capital of 9 percent. The project being analyzed is as follows ($38,000 investment): Use Appendix A and Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Year Cash Flow 1 $ 20,000 2 19,000 3 12,000 a. What is the modified internal rate of return? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Internal rate of return %

Explanation / Answer

Using Excel Funtions, MIRR and IRR we get the MIRR = 14.12% and IRR = 17.82%

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