Question

A project has an initial cost of $64,400, expected net cash inflows of $10,000 per year...

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.

Homework Answers

Answer #1

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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