Calculate the MIRR of the project using the discounting approach method. (Do not

Question

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))

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))

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))

Explanation / Answer

(a) MIRR using the discounting approach. MIRR ______ Percent Solution: Computation of the MIRR Initial investment investment $ (29,100.00) Cash flow $   (5,390.56) $ (34,490.56) Years Cash flows 0 $       (34,491) 1 $         11,300 2 $         14,000 3 $         15,900 4 $         13,000 MIRR = 20.18% Hence the MIRR is 20.18% (b) MIRR using the reinvestment approach. MIRR ______ Percent Solution Computation of the Reinvestment approach Cash flow Reinvested rate Total cash flows $         11,300 1.31079601 $ 14,811.99 $         14,000 1.225043 $ 17,150.60 $         15,900 1.1449 $ 18,203.91 $         13,000 1.07 $ 13,910.00 $         (9,500) 1 $ (9,500.00) $ 54,576.51 -29100+ $   54,576.51 (1+MIRR)^5 $              1.88 (1+MIRR)^5 1.134024792 (1+MIRR) MIRR = 0.134024792 MIRR = 13.40% Hence the MIRR is 13.40% (c) MIRR using the combination approach. MIRR ______ percent Solution Computation of the Combination approach Initial investment investment $ (29,100.00) Cash flow $   (5,390.56) $ (34,490.56) Cash flow Reinvested rate Total cash flows $         11,300 1.31079601 $ 14,811.99 $         14,000 1.225043 $ 17,150.60 $         15,900 1.1449 $ 18,203.91 $         13,000 1.07 $ 13,910.00 $ 64,076.51 $ (34,490.56) $   64,076.51 (1+MIRR)^5 $              1.86 (1+MIRR)^5 1.131878255 (1+MIRR) MIRR = 0.131878255 MIRR = 13.19% Hence the MIRR is 13.19%

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