Npv s 81433 npv l 167534 irr s 1524 irr l 1467 mirr s

This preview shows page 4 - 5 out of 5 pages.

NPV (S) = 814.33 NPV (L) = 1,675.34 IRR (S) = 15.24% IRR (L) = 14.67% MIRR (S) = 13.77% MIRR (L) = 13.46%
Question 3 Taylor Technologies has a target capital structure which is 40 percent debt and 60 percent equity. The equity will be financed with retained earnings. The company’s bonds have a yield to maturity of 10 percent. The company’s stock has a beta = 1.1. The risk-free rate is 6 percent, the market risk premium is 5 percent, and the tax rate is 30 percent. The company is considering a project with the following cash flows: Project A Year Cash Flow 0 -$50,000 1 35,000 2 43,000 3 60,000 4 -40,000 What is the project’s modified internal rate of return (MIRR)? 4
5

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture