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

The MIRR can be calculated using excel.

The MIRR function has three input parameters:

1. The range of values

2. The fianance rate

3. Reinvestment rate

In the 1st approach we will have finance rate = 11% (0.11) and reinvestment rate =0

In the 2nd approach we will have finance rate =0 and reinvestment rate = 8% =0.08

In the 3rd appraoch we will have finance rate = 11%(0.11) and reinvestment rate = 8%(0.08)

In the results are tabulated in excel and are shown below:

Year Cash flow 0 -16500 1 7600 2 8800 3 8400 4 7200 5 -4600 MIRR (Discount approach) 10.72% MIRR (Reinvestment approch) 13.07% MIRR (Combined approach) 15.19%

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