Use the information on the Denver Broncos to answer the following three parts!

The Denver Broncos are considering building a new stadium for $100,000, which is expected to generate cash flows of $60,000 in year 1, $40,000 in year 2, $20,000 in year 3, $10,000 in year 4, and $50,000 in year 5. All cash flows are in thousands of dollars. Assume that the team has a cost of capital of 12%.

a) What is the length of time it will take the franchise to recover its initial cost using discounted cash flows?

2.56 years

2.00 years

4.53 years

3.05 years

None of the above

b) What is the internal rate of return (IRR) on the new stadium?

27.46%

18.21%

18.83%

15.54%

None of the above

c) What is the modified internal rate of return (MIRR) on the new stadium?

20.84%

17.34%

18.83%

16.83%

None of the above