Down Under Stores Is Considering an Investment with an Initial

Down Under Stores is considering an investment with an initial cost of $236,000.In Year 4,the project will require an additional investment and finally,the project will be shut down in Year 7.The annual cash flows for Years 1 to 7,respectively,are projected as $64,000,$87,000,$91,000,−$48,000,$122,000,$154,000,and −$30,000.If all negative cash flows are moved to Time 0 using a discount rate of 13 percent,what is the project's modified IRR?

A) 15.44 percent
B) 17.67 percent
C) 18.54 percent
D) 14.91 percent
E) 22.08 percent

Correct Answer:

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