Question

MIRR A project has an initial cost of $39,450, expected net cash inflows of $11,000 per...

MIRR

A project has an initial cost of $39,450, expected net cash inflows of $11,000 per year for 10 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

MIRR is Modified Internal Rate of Return and at MIRR present value of cash inflows is equals to present value of cash outflows. calculations of MIRR is as below:

Year Cash Flow

Discounting

Factor @12%

Present Value

Discounting

Factors @25%

Present value
0 -39450.00 1 -39,450.00 1 -39,450.00
1-10 11,000.00 5.6502** 62,152.20 3.5705 39,275.50
NPV 22,702.20 -174.20

**Annuity Factors

Discounting Factors assumptions:

  1. 12% is considered as it is cost of capital
  2. 25% is taken so as we will get the negative NPV

We increased the discounting rate by 13% thereby reduction in NPV by 22,876.70 (22,702.20+174.20). We we need the Discounting Factor at which NPV will be reduced by 22,702.20.

MIRR=0.12 + (22702.20*0.13)/22876.70

=0.12 + 0.129008

MIRR=0.249008 i.e.24.90%

At 24.90% present value of cash outflow is equal to present value of cash inflow.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
MIRR A project has an initial cost of $48,025, expected net cash inflows of $8,000 per...
MIRR A project has an initial cost of $48,025, expected net cash inflows of $8,000 per year for 12 years, and a cost of capital of 13%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. Profitability Index A project has an initial cost of $45,950, expected net cash inflows of $13,000 per year for 10 years, and a cost of capital of 12%. What is the project's PI? Do not round...
MIRR A project has an initial cost of $61,500, expected net cash inflows of $11,000 per...
MIRR A project has an initial cost of $61,500, expected net cash inflows of $11,000 per year for 8 years, and a cost of capital of 10%. What is the project's MIRR? Round your answer to two decimal places. %
A project has an initial cost of $73,000, expected net cash inflows of $11,000 per year...
A project has an initial cost of $73,000, expected net cash inflows of $11,000 per year for 6 years, and a cost of capital of 11%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
MIRR A project has an initial cost of $40,500, expected net cash inflows of $15,000 per...
MIRR A project has an initial cost of $40,500, expected net cash inflows of $15,000 per year for 12 years, and a cost of capital of 14%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
MIRR A project has an initial cost of $55,000, expected net cash inflows of $11,000 per...
MIRR A project has an initial cost of $55,000, expected net cash inflows of $11,000 per year for 12 years, and a cost of capital of 8%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places. Unequal Lives Shao Airlines is considering the purchase of two alternative planes. Plane A has an expected life of 5 years, will cost $100 million, and will produce net...
1. A project has an initial cost of $74,475, expected net cash inflows of $9,000 per...
1. A project has an initial cost of $74,475, expected net cash inflows of $9,000 per year for 8 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. 2. A project has an initial cost of $46,800, expected net cash inflows of $10,000 per year for 6 years, and a cost of capital of 13%. What is the project's PI? Do not round your...
A project has an initial cost of $55,000, expected net cash inflows of $12,000 per year...
A project has an initial cost of $55,000, expected net cash inflows of $12,000 per year for 8 years, and a cost of capital of 13%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places. A project has an initial cost of $55,000, expected net cash inflows of $10,000 per year for 11 years, and a cost of capital of 12%. What is the project's...
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.
A project has an initial cost of $65,900, expected net cash inflows of $12,000 per year...
A project has an initial cost of $65,900, expected net cash inflows of $12,000 per year for 12 years, and a cost of capital of 8%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.
A project has an initial cost of $35,000, expected net cash inflows of $11,000 per year...
A project has an initial cost of $35,000, expected net cash inflows of $11,000 per year for 11 years, and a cost of capital of 8%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.