Problem
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the MIRR decision to evaluate this project; should it be accepted or rejected?
|
Time
|
0
|
1
|
2
|
3
|
4
|
5
|
6
|
|
Cash Flow
|
-$ 5,000
|
$ 1,200
|
$ 1,400
|
$ 1,600
|
$ 1,600
|
$ 1,100
|
$ 2,000
|