Your firm is considering a new investment. The initial cost (today) is

Your firm is considering a new investment. The initial cost (today) is $25,000. The project generates year-end annuity cash flows of $15,000 per year for the next two years.

If the hurdle rate for the project is 12% and the reinvestment rate is 9%, calculate the MIRR. Is this an acceptable project?
A) 8.00%; no, the MIRR is less than the hurdle rate
B) 10.10%; yes, the MIRR is greater than the reinvestment rate
C) 13.10%; yes, the MIRR is greater than the reinvestment rate
D) 10.10%; no, the MIRR is less than the hurdle rate

ANSWER

D