Florida Phosphate Is Considering a Project Which Involves Opening a New

Multiple Choice

Florida Phosphate is considering a project which involves opening a new mine at a cost of $10,000,000 at t = 0. The project is expected to have operating cash flows of $5,000,000 at the end of each of the next 4 years. However, the facility will have to be repaired at a cost of $6,000,000 at the end of the second year. Thus, at the end of Year 2 there will be a $5,000,000 operating cash inflow and an outflow of -$6,000,000 for repairs. The company's cost of capital is 15 percent. What is the difference between the project's MIRR and its regular IRR?

A) 0.00%
B) 0.51%
C) 3.40%
D) 9.65%
E) 13.78%