Answered: What is the IRR for project M?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 4CMA

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Question

Internal rate of return and modified internal rate of

return.

Quark Industries has three potential projects, all with an initial cost of

$1,900,000.

Given the discount rate and the future cash flow of each project, what are the IRRs and MIRRs of the three projects for Quark Industries?

Cash Flow	Project M	Project N	Project O
Year 1	$500,000		$600,000	$1,000,000
Year 2	$500,000		$600,000	$800,000
Year 3	$500,000		$600,000	$600,000
Year 4	$500,000		$600,000	$400,000
Year 5	$500,000		$600,000	$200,000
Discount rate	9%	13%	16%

What is the IRR for project M?

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