A semi-conductor company in California will significantly expand her chemical vapor deposition units in their various production sites in south-west of the United States. The cash flow for one phase of the project is shown below. Given reinvestment rate of 15% per year for excess funds and 11 % per year for borrowing rate for extra funds, with 13 % MARR, determine: Year Net cash flow 0 -48000 +20000 2 -90,000 3 +64000 4 -10,000 5 -33,000 a) Determine the number of possible ROR values and why? b) Calculate the external rate of return (MIRR). c) Is the project economically viable?

A semi-conductor company in California will significantly expand her chemical vapor deposition units in their various production sites in south-west of the United States. The cash flow for one phase of the project is shown below. Given reinvestment rate of 15% per year for excess funds and 11 % per year for borrowing rate for extra funds, with 13 % MARR, determine: Year Net cash flow 0 -48000 +20000 2 -90,000 3 +64000 4 -10,000 5 -33,000 a) Determine the number of possible ROR values and why? b) Calculate the external rate of return (MIRR). c) Is the project economically viable?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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