Your firm is considering a project that will cost $4.709 million up front, generate cash flows of $3.55 million per year for 3 years, and then have a cleanup and shutdown cost of $5.96 million in the fourth year. a. How many IRRs does this project have? b. Calculate a modified IRR for this project assuming a discount and compounding rate of 9.7% c. Using the MIRR and a cost of capital of 9.7%, would you take the project? a. How many IRRs does this project have? The project has IRRs. (Select from the drop-down menu.) b. Calculate a modified IRR for this project assuming a discount and compounding rate of 9.7%. The MIRR for this project is % (Round to two decimal places) c. Using the MIRR and a cost of capital of 9.7%, would you take the project? (Select from the drop-down menu.) the project should be taken because the MIRR> 9.7%. Year 4 $16 $62 You are choosing between two projects. The cash flows for the projects are given in the following table ($ million): Project Year 0 Year 1 Year 2 Year 3 A - $49 $27 $21 $22 B -598 $19 $38 $50 a. What are the IRRs of the two projects ? b. If your discount rate is 5.4%, what are the NPVs of the two projects? c. Why do IRR and NPV rank the two projects differently? a. What are the IRRs of the two projects? The IRR for project is %. (Round to one decimal place.) The IRR for project B is % (Round to one decimal place.) b. It your discount rate is 5.4%, what are the NPVs of the two projects? If your discount rate is 5,4%, the NPV for project Als $ million (Round to two decimal places.) If your discount rate is 5.4%, the NPV for project B is $ million (Round to two decimal places.)
