Question

Doak Corp. is evaluating a project with the following cash flows: Year UWNO Cash Flow -$16,500 7,600 8,800 8,400 7,200 - 4,600 The company uses an interest rate of 10 percent on all of its projects. Calculate the MIRR of the project using all three methods. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Discounting approach Reinvestment approach Combination approach 1 24.00% 17.10% 1%

Can't figure out the combination approach

Answer 1

Answer MIRR rusing combin glog Approach) modified Internal pate of Relung can be Gluulated by various ways. Combigtion Appoych is one of them. In combination Approach, we will discount all cosh oyl flous during the life of project and find future valye of Cash inflows. during the project life. It ith the approach where, combination of Present value and fylyne uglte take place. MIRR (Using combi997) on : w rv of Cysh outh Dus FV of cash Inflores - Approach PV of Negatne Cash out flow : 16500 +- 4600 11.10) 5 : $16500 + 2856.23 = $ 1995623 Schelule of FV of Positive ish Inflows feptune volte for Remaining Perjod ofiind Yegi I Fu of 10% sh Inflow 1112.7.16 7600 1.1712.30 ४४०० (1.104 = 1.4641 (1.10) : 1.331 CI.10) = 1.21 TH:10)' = 1.10 8400 10164.00 7920.00 7200 Total . 40923.96 : MIRR (Using t Combination Approach) il FV of Gsh Infloats a d PV of cash outflows 5 N 40923,96 193 56.23 $12.11425 /1 1.16.1545 - 1 0.16 1545 16.1545% MIRR (Using combination : Approach