Chamberlain Corp. is evaluating a project with the following cash flows. The com

Question

Chamberlain Corp. is evaluating a project with the following cash flows. The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects.

Calculate the MIRR of the project using all three methods using these interest rates. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).)

Chamberlain Corp. is evaluating a project with the following cash flows. The company uses a discount rate of 11 percent and a reinvestment rate of 8 percent on all of its projects.

Explanation / Answer

1) Discounting approach - Discounting (-ive) cash flows to year 0 and adding it initial cost and then calculating the IRR through excel the answer is 24.21%

2) Reinvestment approach- Leaving the first cash flow behind , compounding all the cas flows to the end of the period and then calculating the IRR it comes to 17.72%

3) Combination Approach- Discounting all negative cash flows to yr 0 and adding it initial outlay and componding all future cash flows to the end of life and calculating IRR it comes to 16.86%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.