Question

In: Finance

What is the MIRR for this project using the reinvestment approach? The interest rate is 9 percent

Yellow Day has a project with the following cash flows:

Year |Cash Flows

0 −$26,400

1 10,250

2 17,900

3 9,360

4 −3,300

What is the MIRR for this project using the reinvestment approach? The interest rate is 9 percent

Multiple Choice

15.78%

14.73%

12.62%

11.93%

9.95%

Solutions

Expert Solution

Calculation of the MIRR :-

Intial investment = $ 26,400

Calculation of the Terminal cash inflows :-

Years Cash flows CF Invest At Interest rate Terminal cash flows
1 $        10,250 1.295029 $                  13,274.05
2 $        17,900 1.1881 $                  21,266.99
3 $          9,360 1.09 $                  10,202.40
4 $        (3,300) 1 $                  (3,300.00)
Terminal cash flows $                  41,443.44

MIRR = (Terminal cash inflows / Initial investment )1/n - 1

=($ 41,443.44 / 26,400)1/4 - 1

=(1.5698272)1/4 -1

= 1.119342414 - 1 = 0.119342414

MIRR = 11.93%

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Based on the MIRR of the following project, using the Reinvestment approach and a discount rate...
Based on the MIRR of the following project, using the Reinvestment approach and a discount rate of 13.38 percent, should the project be accepted? Answer 1 if Yes and 0 if No. Year Cash Flow 0 $-91126 1 $47683 2 $43512 3 $69601 4 $-44473
Calculate the project's MIRR, given a discount rate of 9 percent. The MIRR of the project with a discount rate of 9% is...
Emily's Soccer Mania is considering building a new plant. This project would require an initial cash outlay of $8.5 million and would generate annual cash inflows of $3.5 million per year for years one through four. In year five the project will require an investment outlay of $5.5 million. During years 6 through 10 the project will provide cash inflows of $5.5 million per year.Question:Calculate the project's MIRR, given a discount rate of 9 percent. The MIRR of the project...
The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods.
Solo Corp. is evaluating a project with the following cash flows:Year Cash Flow 0 –$28,600Year 1 Cash Flow $10,800Year 2 Cash Flow $13,500Year 3 Cash Flow $15,400Year 4 1Cash Flow $2,500Year 5 Cash Flow $–9,000The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods.a. MIRR using the discounting approach.b. MIRR using the reinvestment approach.c. MIRR using the combination approach.
The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods.
Solo Corp. is evaluating a project with the following cash flows:    Year Cash Flow 0 –$29,800         1 12,000         2 14,700         3 16,600         4 13,700         5 –10,200            The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using all three methods.    a. MIRR using the discounting approach.     b. MIRR using the reinvestment approach.     c. MIRR using the combination approach.
What is the MIRR of project with the following cash flows? The discounting rate is 14%....
What is the MIRR of project with the following cash flows? The discounting rate is 14%. Year Cash Flow 0 -1,200,000 1 400,000 2 500,000 3 500,000 4 500,000 5 500,000 6 500,000
Given an interest rate of 6.95 percent per year, what is the value at Year 9...
Given an interest rate of 6.95 percent per year, what is the value at Year 9 of a perpetual stream $3,700 payments that begin at Year 20? (Do not round intermediate calculations and round your answer to 2 decimal places , e.g., 32.16.)
Describe the concepts of interest rate risk and reinvestment risk. Given these concepts of risk, what...
Describe the concepts of interest rate risk and reinvestment risk. Given these concepts of risk, what does this say about risk-free bonds?
Why is “interest rate price risk” and “reinvestment risk” important? Explain, then, what happens to those...
Why is “interest rate price risk” and “reinvestment risk” important? Explain, then, what happens to those when a) we switch from short to long term bonds, and b) bonds with low to high coupons?
Find the value of $475 per quarter in perpetuity if the interest rate is 9 percent....
Find the value of $475 per quarter in perpetuity if the interest rate is 9 percent. Do not write any symbol ($, #, &,...). Round your answer to the nearest one-hundredth percentage point. For example, write 1125.34 for $1,125.34
At an interest rate of 9 percent, an investment of $1 would double in 8.04 years....
At an interest rate of 9 percent, an investment of $1 would double in 8.04 years. How long to the nearest year would it take an investment of $1 to grow four fold (4 times) if the interest rate was only 4 percent? a. 12 years b. 24 years c. 36 years d. 48 years e. 96 years
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT