Question

A company is evaluating a project with the following cash flows: Year CASH FLOW 0 -49,000...

A company is evaluating a project with the following cash flows:

Year CASH FLOW
0 -49,000
1 13,700
2 25,200
3 30,500
4 19,800
5 -8,500

The company uses an interest rate of 10% on all projects, Calculate the MIRR of the project using all three methods

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Answer #1

MIRR is defined as follows

Terminal value = 13700 ( 1 + 0.10) 4 + 25200 ( 1 + 0.10)3 + 30500 ( 1 + 0.10)2 + 19800 ( 1 + 0.10)1

Terminal value = 112284.37

MIRR = 15.65 %

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