11.15b (Calculating MIRR) OTR Trucking runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project will require an initial cash outlay of $20 million and will generate annual cash inflows of $4.5 million per year for Years 1 through 3. In Year 4, the project will provide a net negative cash flow of $5,000,000 due to anticipated expansion of and repairs to the facility. During Years 5 through 10, the project will provide cash inflows of $2 million per year. b. Calculate the project's MIRR. Is the project a worthwhile investment based on this measure? Why or why not? NOT EXCEL IN FOMULA
11.15b (Calculating MIRR) OTR Trucking runs a fleet of long-haul trucks and has recently expanded into the Midwest, where it has decided to build a maintenance facility. This project will require an initial cash outlay of $20 million and will generate annual cash inflows of $4.5 million per year for Years 1 through 3. In Year 4, the project will provide a net negative cash flow of $5,000,000 due to anticipated expansion of and repairs to the facility. During Years 5 through 10, the project will provide cash inflows of $2 million per year. b. Calculate the project's MIRR. Is the project a worthwhile investment based on this measure? Why or why not? NOT EXCEL IN FOMULA
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 12P
Related questions
Question
![11.15b (Calculating MIRR) OTR Trucking runs a
fleet of long-haul trucks and has recently
expanded into the Midwest, where it has decided
to build a maintenance facility. This project will
require an initial cash outlay of $20 million and will
generate annual cash inflows of $4.5 million per
year for Years 1 through 3. In Year 4, the project
will provide a net negative cash flow of $5,000,000
due to anticipated expansion of and repairs to the
facility. During Years 5 through 10, the project will
provide cash inflows of $2 million per year. b.
Calculate the project's MIRR. Is the project a
worthwhile investment based on this measure?
Why or why not? NOT EXCEL IN FOMULA](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F551a976f-31f9-4688-8459-abcaf31420a2%2Ff5885486-9edb-4e13-8aaa-be657502e299%2Fxiko31k_processed.png&w=3840&q=75)
Transcribed Image Text:11.15b (Calculating MIRR) OTR Trucking runs a
fleet of long-haul trucks and has recently
expanded into the Midwest, where it has decided
to build a maintenance facility. This project will
require an initial cash outlay of $20 million and will
generate annual cash inflows of $4.5 million per
year for Years 1 through 3. In Year 4, the project
will provide a net negative cash flow of $5,000,000
due to anticipated expansion of and repairs to the
facility. During Years 5 through 10, the project will
provide cash inflows of $2 million per year. b.
Calculate the project's MIRR. Is the project a
worthwhile investment based on this measure?
Why or why not? NOT EXCEL IN FOMULA
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