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 10 percent and a reinvestment rate of 7 percent on all of its projects. Year Cash Flow 0 –$ 15,400 1 6,500 2 7,700 3 7,300 4 6,100 5 – 3,500 Required: 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).) MIRR Discounting approach % Reinvestment approach % Combination approach % I have posted this question twice and the answer was not completed for 3 parts and was then incorrect. Thank you for your help

Explanation / Answer

interest rate 10% Discounting method Year Cash Flow Cash Flow(CF) 0 -15,400 -17573.2246 1 6,500 6,500 2 7,700 7,700 3 7,300 7,300 4 6,100 6,100 5 -3,500 0 MIRR 21.07% (MIRR=IRR(above Cashflows CF yr0-5) Present value of all negative cash flows -17573.2246 (=-15400-3500/1.1^5) interest rate 7% Reinvestment method Year Cash Flow Future Value of Cash Flow yr1-5 0 -15,400 (FVt=CashFlow*(1+interest rate)^(5-Year)) 1 6,500 8520.174065 2 7,700 9432.8311 3 7,300 8357.77 4 6,100 6527.00 5 -3,500 -3500.00 Total Future Value(FV) 29337.77516 (=sum above FVts) Investment(Inv) -15,400 MIRR=(FV/-Inv)^(1/5)-1 13.76% Combination method PV-(PV of -ve cash flows) FV+(FV of +ve cash flows) Year(t) Cash Flow(CF) (=IF(CF0,CF*(1+7%)^(5-t),"") 0 -15,400 -15400 1 6,500 8520.174065 2 7,700 9432.8311 3 7,300 8357.77 4 6,100 6527 5 -3,500 -2173.224631 Total -17573.22463 32837.77516 (=PVT-) (=FVT+) MIRR=(FVT+/-PVT-)^(1/5)-1 13.32% MIRR(CFs yr 0-5,10%,7%) 13.32%

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