?(Related to Checkpoint? 11.6) ?(Calculating MIRR) The Dunder Muffin Company is considering purchasing a new commercial...

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?(Related to Checkpoint? 11.6) ?(Calculating MIRR) The DunderMuffin Company is considering purchasing a new commercial oven thatcosts ?$320 comma 000. This new oven will produce cash inflows of?$165 comma 000 at the end of Years 1 through 10. In addition tothe cash? inflows, at the end of Year 5 there will be a net cashoutflow of ?$245 comma 000. The company has a weighted average costof capital of 11.8 percent. What is the MIRR of the? investment?Would you make the? investment? Why or why? not? Note that wediscounted the? project's negative cash flows back to the presentusing the? project's required rate of return and then computed theMIRR from the modified cash flows.
The MIRR of the investment with a discount rate of 11.8?% isRound to two decimal? places.)
Would you make the? investment? Why or why? not????(Select thebest choice? below.)
A.
?Yes, the project is worthwhile based on this measure becausethe MIRR is greater than the discount rate.
B.
?Yes, the project is worthwhile based on this measure becausethe MIRR is less than the discount rate.
C.
?No, the project is not worthwhile based on this measure becausethe MIRR is greater than the discount rate.
D.
?No, the project is not worthwhile based on this measure becausethe MIRR is less than the discount rate.

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3.6 Ratings (466 Votes)

MIRR 2157A Yes the project is worthwhile based on this measure becausethe See Answer

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?(Related to Checkpoint? 11.6) ?(Calculating MIRR) The DunderMuffin Company is considering purchasing a new commercial oven thatcosts ?$320 comma 000. This new oven will produce cash inflows of?$165 comma 000 at the end of Years 1 through 10. In addition tothe cash? inflows, at the end of Year 5 there will be a net cashoutflow of ?$245 comma 000. The company has a weighted average costof capital of 11.8 percent. What is the MIRR of the? investment?Would you make the? investment? Why or why? not? Note that wediscounted the? project's negative cash flows back to the presentusing the? project's required rate of return and then computed theMIRR from the modified cash flows.The MIRR of the investment with a discount rate of 11.8?% isRound to two decimal? places.)Would you make the? investment? Why or why? not????(Select thebest choice? below.)A.?Yes, the project is worthwhile based on this measure becausethe MIRR is greater than the discount rate.B.?Yes, the project is worthwhile based on this measure becausethe MIRR is less than the discount rate.C.?No, the project is not worthwhile based on this measure becausethe MIRR is greater than the discount rate.D.?No, the project is not worthwhile based on this measure becausethe MIRR is less than the discount rate.