Cold Goose Metal Works Inc. is analyzing a project that requires an initial investment of $3,000,000. The project’s expected cash flows are: Year Cash Flow Year 1 $325,000 Year 2 –125,000 Year 3 425,000 Year 4 425,000   Cold Goose Metal Works Inc.’s WACC is 9%, and the project has the same risk as the firm’s average project. Calculate this project’s modified internal rate of return (MIRR): 17.95%   -19.42%   20.78%   22.67%     If Cold Goose Metal Works Inc.’s managers select projects based on the MIRR criterion, they should    this independent project.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.