13.value: 5.00 points Slow Ride Corp. is evaluating a project with the following

Question

13.value: 5.00 points Slow Ride Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 $ 29,100 1 11,300 2 14,000 3 15,900 4 13,000 5 9,500 The company uses an interest rate of 8 percent on all of its projects. Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) MIRR % Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) MIRR % Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) MIRR %

Explanation / Answer

using Combination method:

0 = -29100 + (11300/(1+8) + 14000/(1+8)^2 + 15000/(1+8)^3 + 13000/(1+8)^4 + 9500/(1+8)^5 ) / (1 + MIRR)^5

MIRR = 11.61%

Reinvestment method:

0 = -29100 + (11300/(1+8) + 14000/(1+8)^2 + 15000/(1+8)^3 + 13000/(1+8)^4 + 9500/(1+8)^5 ) / (1 + MIRR)^5

NPV = 21294.11

21294.11 = 50394.11/(1+MIRR)^5

MIRR = 19.03%

Discounting method:

0 = -29100 + (11300/(1+MIRR) + 14000/(1+MIRR)^2 + 15000/(1+MIRR)^3 + 13000/(1+MIRR)^4 + 9500/(1+MIRR)^5 )

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