Question

Franklin Electric Generators is considering a project with the following data. What is the project's MIRR? Enter your answer as a decimal with four places of precision (i.e. 0.1234).

WACC = 10%

Year:	0	1	2	3	4
Cash Flow:	-$1,000	$350	$370	$250	$420

Answer 1

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=350*(1.1)^3+370*(1.1)^2+250*(1.1)+420

=1608.55

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

=[1608.55/1000]^(1/4)-1

=0.1262(Approx).