Explain capital budgeting involves calculation of modified

Reference no: EM1312938

Explain Capital budgeting involves calculation of modified internal rate of return

Taylor Technologies has a target capital structure, which is 40 percent debt and 60 percent equity. The equity will be financed with retained earnings. The company's bonds have a yield to maturity of 10 percent. The company's stock has a beta = 1.1. The risk-free rate is 6 percent, the market risk premium is 5 percent, and the tax rate is 30 percent. The company is considering a project with the following cash flows:

Project Year Cash Flow
0 ($50,000)
1 35,000
2 43,000
3 60,000
4 -40,000

What is the project's modified internal rate of return (MIRR)?

Reference no: EM1312938

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