Question

A project has the following cash flows : Year Cash Flows 0. ?$11,600 1. 5,050 2....

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%

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Homework Answers

Answer #1
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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