Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. blue llama mining company is analyzing a project t

Blue Llama Mining Company is analyzing a project that requires an initial investment of $500,000....

90.2K

Verified Solution

Question

Finance

Blue Llama Mining Company is analyzing a project that requires an initial investment of $500,000. The projects expected cash flows are:

Year

Cash Flow
Year 1 $325,000
Year 2 100,000
Year 3 450,000
Year 4 500,000

Blue Llama Mining Companys WACC is 8%, and the project has the same risk as the firms average project. Calculate this projects modified internal rate of return (MIRR):

20.60%

26.66%

27.88%

24.24%

If Blue Llama Mining Companys managers select projects based on the MIRR criterion, they should this independent project.

Which of the following statements best describes the difference between the IRR method and the MIRR method?

The IRR method uses the present value of the initial investment to calculate the IRR. The MIRR method uses the terminal value of the initial investment to calculate the MIRR.

The IRR method uses only cash inflows to calculate the IRR. The MIRR method uses both cash inflows and cash outflows to calculate the MIRR.

The IRR method assumes that cash flows are reinvested at a rate of return equal to the IRR. The MIRR method assumes that cash flows are reinvested at a rate of return equal to the cost of capital.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Programming
1.2K views

C++ Only Create a function named PrintStudents, which takes a string input filename and an integer minimum...

Economics
1.2K views

Sandra “has it all”: a handsome and successful husband, a beautiful home in the city,...

Biology
1.2K views

The diagram below shows some chromosomal alterations 00 Chromosome 11 99 AB CD AB CD...

Biology
1.2K views

1 Which plasma membrane component can be either found on its surface or embedded in...

Physics
1.2K views

dt There is a horizontal cylindrical uniform but time varying magnetic field increasing at a...

Physics
1.2K views

The oscillation of a body on a smooth horizontal surface is represented by the equation...

Geometry
1.2K views

9 Consider rhombus ABCD A B a Find the resultants of AB AD and AB...

Calculus
1.2K views

Use the integral test to determine whether the series is 00 n 1 7 n...

Algebra
1.2K views

Write 108 in simplest radical form

Algebra
1.2K views

1 T Students Faculty Administrators TOTAL 8 Importance of Interacting With People via Social Media...

Algebra
1.2K views

When a college started an aviation program the administration agreed to predict enrollments using a...

Accounting
1.2K views

Required information Exercise 12-11 Indirect: Preparing statement of cash flows LO P1, P2, P3, A1...