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Green Submarine has a project with the following cash flows: Year Cash Flows −$18,150 1 7,380...

Green Submarine has a project with the following cash flows: Year Cash Flows −$18,150 1 7,380 2 13,550 3 8,190 4 −3,350 The discounting rate is 6 percent and the reinvestment rate is 8 percent. What is the MIRR for this project using the combination approach?

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Answer #1

All negative cash flows are discounted back to the present and all positive cash flows are compounded out to the end of the project’s life


Year 0: -18150-3350/1.06^4

Year 1: 0

Year 2: 0

Year 3: 0

Year 4: 7380*1.08^3+13550*1.08^2+8190*1.08

MIRR=((7380*1.08^3+13550*1.08^2+8190*1.08)/(18150+3350/1.06^4))^(1/4)-1=13.02%

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