Last week, Giant Inc analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates...

Last week, Giant Inc analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm’s cost of capital from 8% to 10%. The Fed’s action did not affect the forecasted cash flows. By how much did the change in the cost of capital affect the project’s forecasted NPV? Year 0 1 2 3 Cash Flows -$500 $325 $325 $325

1. -$29.33 b. -$78.93 c. -$337.56 d. -$308.23 e. Cannot be determined

Ginger Inc is considering a project that has the following cash flow data. What is the project’s MIRR, if the cost of capital is 14%? Year 0 1 2 3 Cash Flows -$500 $300 -$100 $900

1. 9.22% b. 38.90% c. 29.06% d. 41.08% e. 30.76%