A firm considers a project with the following cash flows: the initial cost at time 0...

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A firm considers a project with the following cash flows: the initial cost at time 0 is $1,000 (negative), the following cash

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Answer 1

Answer #1

Answer is 12.40%

WACC = 11%

Future Value of Cash Inflows = $1,000*1.11^3 + $100*1.11^2 + $50*1.11 + $50
Future Value of Cash Inflows = $1,596.341

MIRR = (Future Value of Cash Inflows / Present Value of Cash Outflows)^(1/Time Period) - 1
MIRR = ($1,596.341 / $1,000)^(1/4) - 1
MIRR = 1.596341^(1/4) - 1
MIRR = 1.1240 - 1
MIRR = 0.1240 or 12.40%

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Answer 2

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