A project has the following cash flows :
Year Cash Flows
0. ?$11,600
1. 5,050
2. 7,270
3. 4,720
4. ?1,660
Assuming the appropriate interest rate is 10 percent, what is the MIRR for this project using the discounting approach?
11.00%
17.51%
13.91%
13.20%
16.22%
Year | 0 | 1 | 2 | 3 | 4 |
Cash flow stream | -11600.000 | 5050.000 | 7270.000 | 4720.000 | -1660.000 |
Discounting factor (Using discount rate) | 1.000 | 1.100 | 1.210 | 1.331 | 1.464 |
Discounted cash flows | -11600.000 | 4590.909 | 6008.264 | 3546.206 | -1133.802 |
Modified cash flow | -12733.802 | 5050.000 | 7270.000 | 4720.000 | 0.000 |
Discounting factor (using MIRR) | 1.000 | 1.162 | 1.351 | 1.570 | 1.825 |
Discounted cash flows | -12733.802 | 4345.112 | 5382.123 | 3006.567 | 0.000 |
NPV = Sum of discounted cash flows | |||||
NPV Reinvestment rate = | 0.00 | ||||
MIRR is the rate at which NPV = 0 | |||||
MIRR= | 16.22% | ||||
Where | |||||
Discounting factor = | (1 + discount rate)^(Corresponding period in years) | ||||
Discounted Cashflow= | Cash flow stream/discounting factor |
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