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Compute the MIRR statistic for Project J if the appropriate cost of capital is 10 percent....

Compute the MIRR statistic for Project J if the appropriate cost of capital is 10 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project J
Time: 0 1 2 3 4 5
Cash flow: −$1,000 $350 $1,480 −$520 $300 −$100

MIRR ______ %

Should the project be accepted or rejected?

Solutions

Expert Solution

let me know if you need any clarification..

Computation of MIRR
Year Cash flow
0        (1,000)
1             350
2          1,480
3           (520)
4             300
5           (100)
we have to first compute the future value of the cash flow from year 1 to 5
Year Cash flow Future value
1             350      512.44 =350*(1+10%)^4
2          1,480 1,969.88 =1480*(1+10%)^3
3           (520)    (629.20) =-520*(1+10%)^2
4             300 3,300.00 =3000*(1+10%)
5           (100)    (100.00) -100
future value = 5,053.12
now we have to use financial calculator to compute the MIRR
Put in calcluator
PV -1000
PMT 0
FV 5,053.12
N 5
Compute I 38.26%
therefore MIRR = 38.26%
Project should be ACCEPTED.

jeff jeffy answered 6 months ago
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