Question: Taylor Technologies has a target capital structure, which are 40% debt & 60% equity. The equity will be financed with retained earnings. The company's bonds have a yield to maturity of 10%. The company's stock has a beta = 1.1. The risk free value is six percent, the market risk premium is 5%, & the tax rate is 30%. 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
|
Determine the project's modified internal rate of return (MIRR)?