Look again at the project cash flows in Problem 10. Calculate the modified IRR as defined in Footnote 4 in Section 5.3. Assume the cost of capital is 12%.
Now try the following variation on the MIRR concept. Figure out the fraction x such that x times C1 and C2 has the same present value as (minus) C3.
Define the modified project IRR as the solution of
Now you have two MIRRs. Which is more meaningful? If you can't decide, what do you conclude about the usefulness of MIRRs?
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.