Mass Distribution Inc. is considering the construction of a facility at a cost of $25 million....
Mass Distribution Inc. is considering the construction of a facility at a cost of $25 million. The project will produce positive cash flows of $10 million per year for the next 4 years but the 5th and final year will have a net negative cash flow of $6 million. If the reinvestment rate is 6% and the cost of capital is 9%, the MIRR of this project is ________ and the project should be ________ (accepted/rejected) Show all work and explain.
Homework Answers
MIRR=((10/6%*(1.06^4-1))/(25+6/1.09^5+6/1.09^6))^(1/6)-1
=5.0897%
The project should be rejected as MIRR is less than the cost of
capital
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Mass Distribution Inc. is considering the construction of a
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