Question

Given the following cash flows. A profitability index equal to 1.164615 A12% discount rate. Estimate the...

Given the following cash flows.

  • A profitability index equal to 1.164615
  • A12% discount rate.

Estimate the initial outlay and the MIRR.

Years

CFt

0

XXX,000?

1

$275,000

2

$275,000

3

$275,000

4

$275,000

5

$275,000

6

$0

7

($150,000)
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Homework Answers

Answer #1
Discount rate 12%
0 1 2 3 4 5 6 7
Cash flows 275000 275000 275000 275000 275000 0 -150000
Present Value 245535.7 219228.3 195739.6 174767.5 156042.4 0 -67852.4
Net Present Value 923461.1
Profitability Index 1.164615
Initial Cash flow 792932.5

Nearest thousand value for the Initial Cash flow = $793,000

Discount rate 12%
0 1 2 3 4 5 6 7
Cash flows -793000 275000 275000 275000 275000 275000 0 -150000
Present Value -793000 245535.7 219228.3 195739.6 174767.5 156042.4 0 -67852.4
MIRR 14.28%

MIRR = 14.3%

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