Question

What are the steps for solving for MIRR using a Ti-84 calculator given the following information: (Please list all steps and keys to press to arrive to the conclusion)

	C0	C1	C2	IRR	NPV@10%
Project A	-$1.6M	+$10M	-$10M	25%, 400%	-$0.77M

Answer 1

The present value of the cash flows can be found by using the Financial calculator. Calculate the total present value of each of the cash flows, starting from period 1 (leave out the cash outlays). Clear the TVM keys and then enter the cash flows (remember that we are ignoring the cost of the investment at this point): press 2nd CE/C to clear the cash flow keys. Now, press CF then 0 Enter down arrow, 10 Enter down arrow(twice). Now, press the NPV key and enter 10 Enter down arrow when prompted for the interest rate. To get the present value of the cash flows press CPT. We find that the present value is $9.09

To find the future value of the cash flows, enter -9.09 into PV, 2 into N, and 10 into I/Y. Now press CPT FV and see that the future value is $11.

Now, we need to find the PV of the cash outflows, for that we need to enter the cash outlays into financial calculator;

Clear the TVM keys and then enter the cash flows (remember that we are ignoring the cost of the investment at this point): press 2nd CE/C to clear the cash flow keys. Now, press CF then -1.6 Enter down arrow, 0 Enter down arrow(twice), -10 Enter down arrow(twice). Now, press the NPV key and enter 10 Enter down arrow when prompted for the interest rate. To get the present value of the cash flows press CPT. We find that the present value is -$9.86446281

At this point our problem has been transformed into an $9.86446281 investment with a lump sum cash flow of $11 million at period 2. The MIRR is the discount rate (I/Y) that equates these two numbers.

Enter -9.86446281 into PV and then press CPT I/Y. The MIRR is 5.60% per year.