Alyeska salmon Inc, a large salmon canning firm operating out of Valde

Alyeska salmon Inc, a large salmon canning firm operating out of Valdez, Alaska, has a new automated production line project it is considering.

The project has a cost of $275,000 and is expected to provide after-tax annual cash flows of $73,306 for eight years. The firm’s management is uncomfortable with the IRR reinvestment assumption and prefers the modified IRR approach. You have calculated a cost of capital for the firm of 12 percent. What is the project’s MIRR?
A) 15%
B) 14%
C) 12%
D) 16%
E) 17%

ANSWER

D