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Calculate the MIRR of the following project. Corp. ABC's initial investment cost is $180, and Corp....

Calculate the MIRR of the following project. Corp. ABC's initial investment cost is $180, and Corp. ABC will receive cash inflows of $55, $142, and $35 over the next three years. The discount rate is 13%. Show all of your work (written out). Round to the nearest 0.01%.

Solutions

Expert Solution

MIRR = (FVCF/PVCF)^(1/N -1)

Where:

  • FVCF – the future value of positive cash flows discounted
  • PVCF – the present value of negative cash flows discounted
  • n – the number of periods

present value factors are 0.884, 0.783, 0.693 for year 1 to 3.

therefore FVCF is 0.884(55)+0.783(142)+0.693(35) = 184.06

PVCF is 180

n is 3

by putting in formula we get

(184.06/180)^(1/3 -1/1)

= 13.86%

jeff jeffy answered 2 years ago
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