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A project has an initial cost of $63,000, expected net cash inflows of $9,000 per year...

A project has an initial cost of $63,000, expected net cash inflows of $9,000 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.

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Expert Solution

Step-1:Calculation of future Value of Annual cash inflows
Year Cash flows Future value of 1 Future Value of cash inflows
a b c=1.12^(11-a) d=b*c
1 $            9,000              3.1058 $      27,952.63
2                 9,000              2.7731          24,957.71
3                 9,000              2.4760          22,283.67
4                 9,000              2.2107          19,896.13
5                 9,000              1.9738          17,764.40
6                 9,000              1.7623          15,861.08
7                 9,000              1.5735          14,161.67
8                 9,000              1.4049          12,644.35
9                 9,000              1.2544          11,289.60
10                 9,000              1.1200          10,080.00
11                 9,000              1.0000            9,000.00
Total      1,85,891.25
Step-2:Present Value of cash outflows
Present value of cash outflows $          -63,000
Step-3:Calculation of Project's MIRR
MIRR = ((Future Value of cash inflows / Present value of cah outflows)^(1/11))-1
= ((185891.25/63000)^(1/11))-1
= 10.34%

jeff jeffy answered 2 years ago
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