Question

# Problem 9-20 MIRR [LO6] RAK Corp. is evaluating a project with the following cash flows:   ...

Problem 9-20 MIRR [LO6]

 RAK Corp. is evaluating a project with the following cash flows:

 Year Cash Flow 0 –\$ 30,000 1 12,200 2 14,900 3 16,800 4 13,900 5 – 10,400

 The company uses a discount rate of 12 percent and a reinvestment rate of 7 percent on all of its projects.

 Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 MIRR %

 Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 MIRR %
 Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 MIRR %

#### Homework Answers

Answer #1

1. MIRR using discounting approach (using Excel):

 Year Cash Flow 0 -30000.00 Discount Rate 12.00% 1 12200.00 Reinvest Rate 7.00% 2 14900.00 MIRR 16.42% 3 16800.00 4 13900.00 5 -10400.00

2. MIRR using reinvestment approach :

 Year Cash Flow 0 -30000.00 Discount Rate 12.00% 1 12200.00 Reinvest Rate 7.00% 2 14900.00 MIRR 12.81% 3 16800.00 4 13900.00 5 -10400.00

3. MIRR using combination approach :

 Year Cash Flow 0 -30000.00 Discount Rate 12.00% 1 12200.00 Reinvest Rate 7.00% 2 14900.00 MIRR 13.74% 3 16800.00 4 13900.00 5 -10400.00
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