Question

Project L requires an initial outlay at t = 0 of $40,000, its expected cash inflows are $9,000 per year for 9 years, and its WACC is 9%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

Answer 1

WACC	9%
Time Period	Cash Flows	FV (+ve Cash flows)
0	-40000
1	9000	17933.064
2	9000	16452.352
3	9000	15093.901
4	9000	13847.616
5	9000	12704.234
6	9000	11655.261
7	9000	10692.9
8	9000	9810
9	9000	9000
	Total FV	117189.33

FV (+ve cash flows) = $9,000 × [(1.09)^8 + (1.09)^7 + (1.09)^6 + (1.09)^5 + (1.09)^4 + (1.09)^3 + (1.09)^2 + (1.09)^1 + (1.09)^0] = $117,189.33

MIRR = ($117,189.33 / $40,000)1/9 – 1 = 12.69%