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Dunder Mifflin Paper Company is considering purchasing a new stamping machine that costs $400,000. This new machine will produce cash inflows of $100,000 each year at the end of years 1 through 5, then at the end of year 7 there will be a cash outflow of $250,000. The company has a weighted average cost of capital of 11% ( use this as the reinvestment rate), What is the MIRR of the investment?
2. Artie's Wrestling Stuff is considering building a new plant. This plant would require an initial cash outlay of $8 million and will generate annual free cash inflows of $1 million per year for 8 years. Calculate the project's MIRR given:A) A required rate of return of 10% B) A required rate of return of 13% C) A required rate of return of 14%
3. Calculate the MIRR given the following casg flows if the appropriate required rate of return is 12%(use this as the investment rate)
Year | Cash Flow |
0 | -40000 |
1 | 35000 |
2 | 35000 |
3 | 35000 |
4 | -35000 |
5 | 35000 |
6 | 35000 |
4. You are considering a project with the following cash flows:
Year | Cash Flow |
0 | -60000 |
1 | 25000 |
2 | 25000 |
3 | 25000 |
4 | 25000 |
If the appropriate discount rate is 8%, what is the projects discounted payback period?
5. Your investment advisor has offered you an investment that will provide you with one cash flow of $152,000 at the end of 35 years if you pay premiums of $250 per year at the end of each year for 35 years. Find the internal rate of return on this investment. |
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