Question

Using the BAII Plus calculator

I am having a difficult time using this calculator to solve this MIRR

0 =-325,000

1=50,000

2= 75,000

3=-60,000

4=225,000

5=300,000

Required rate of return =15%

We discount all negative CFs(at 15%) time 0

We compound all positive cash flows (at 15%) to 5 years

This is now the TV or Terminal Value

Please help me understand how to calculate these numbers?

Answer 1

A	B	C	D	E	F	G	H	I	J	K	L
2
3		Calculation of MIRR:
4		MIRR is the rate at which PV of cash outflows is equal to the PV of FV of cash inflows.
5		Project term	5	years
6		Required rate of return	15%
7		Incremental cash flows:
8		Year	0	1	2	3	4	5
9		Incremental Cash Flow	($325,000)	$50,000	$75,000	($60,000)	$225,000	$300,000
10
11		PV of cash outflow	=$325,000 + $60,000 * (1/(1+15%)3)
12			$364,451	=-D9+(-G9)/((1+D6)^G8)
13		Calculation of Future Value of cash inflows
14		Year	0	1	2	3	4	5
15		Incremental Cash Flow		$50,000	$75,000	$0	$225,000	$300,000
16		MARR	15%
17		Future Value of cash inflows		$87,450	$114,066	$0	$258,750	$300,000	=I15*((1+$D$16)^($D$5-I14))
18		Total FV of cash inflows	$760,266	=SUM(E17:I17)
19
20		Let r be the MIRR then,
21		PV of cash outflow*(1+r)5=FV of cash inflow
22		$364,451*(1+r)5=$760,266
23
24		Solving the above equation:
25		r =	15.84%	=((D18/D12)^(1/D5))-1
26
27		Hence MIRR is	15.84%
28

Formula sheet