Question: The caffeine coffee company uses modified internal rate of return. The firm has a cost capital of 11 percent. The project being analyzed is as follows ($26,000 investment).
Year 1 12,000
Year 2 11,0000
Year 3 9,000
What is the modified internal rate of return? (use a Texas Instrument Analyst to compute the MIRR and include the steps.)
Assume the traditional rate of return on the investment is 17.5 percent. Explain why your answer in part a would be lower.