Multiple Rates of Return
The Ulmer Uranium Company is deciding whether or not it should open a strip mine whose net cost is $4.4 million. Net cash inflows are expected to be $27.7 million, all coming at the end of Year 1. The land must be returned to its natural state at a cost of $25 million, payable at the end of Year 2.
Plot the project's NPV profile.
Select the correct graph.
The correct graph is -Select-ABCDItem 1 .
Should the project be accepted if r = 9%?
-Select-YesNoItem 2
Should the project be accepted if r = 12%?
-Select-YesNoItem 3
What is the project's MIRR at r = 9%? Round your answer to two decimal places.
%
What is the project's MIRR at r = 12%? Round your answer to two decimal places.
%
Calculate the two projects' NPVs. Round your answers to the nearest cent.
Project 1 $
Project 2 $
Does the MIRR method lead to the same accept-reject decision as the NPV method?