We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.
Future value of inflows=5480*(1.12)^3+4330*(1.12)^2+1670*(1.12)+2150
=$17150.9574
MIRR=[Future value of inflows/Present value of outflows]^(1/time period)-1
=[17150.9574/11300]^(1/4)-1
=10.99%(Approx)
Hence since MIRR is less than cost of capital;project must be rejected.
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