A project has an initial cost of $64,400, expected net cash inflows of $10,000 per year for 11 years, and a cost of capital of 12%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
Year |
Cash Inflows |
Future Value Factor |
Future cash inflows |
1 |
10000 |
1.12 |
11200 |
2 |
10000 |
1.2544 |
12544 |
3 |
10000 |
1.4049 |
14049 |
4 |
10000 |
1.5735 |
15735 |
5 |
10000 |
1.7623 |
17623 |
6 |
10000 |
1.9738 |
19738 |
7 |
10000 |
2.2107 |
22107 |
8 |
10000 |
2.476 |
24760 |
9 |
10000 |
2.7731 |
27731 |
10 |
10000 |
3.3946 |
33946 |
11 |
10000 |
3.4785 |
34785 |
Total future value of cash inflows = 234,218
MIRR = cash outflows =Future value of cash inflows or terminal value
64,400 = 234218/ (1+r)11
= (1+r)11 =234218 /64,400
= (1+r) 11 = 3.636925
= (1+r) = 1.12454
r = 1.123223 – 1 = 0.12454 = 12.45%
MIRR= 12.45%
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