A project has an initial cost of $50,000, expected net cash inflows of $8,000 per year...

A project has an initial cost of $50,000, expected net cash inflows of $8,000 per year for 12 years, and a cost of capital of 13%. What is the project's MIRR? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.

Expert Solution

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=8000*[(1.13)^12-1]/0.13

=8000*25.6501777

=205201.422

MIRR=[Future value of annuity/Present value of outflows]^(1/time period)-1

=[205201.422/50,000]^(1/12)-1

=12.49%(Approx)

jeff jeffy answered 2 years ago

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