(Related to Checkpoint 11.6) (MIRR calculation) Emily\'s Soccer Mania is conside

Question

(Related to Checkpoint 11.6) (MIRR calculation) Emily's Soccer Mania is considering building a new plant. This project would require an initial cash outlay of $10.5 million and would generate annual cash inflows of $3.8 million per year for years one through four. In year five the project will require an investment outlay of $6 million. During years 6 through 10 the project will provide cash inflows of $6 million per year. Calculate the project's MIRR, given a discount rate of 14 percent. The MIRR of the project with a discount rate of 14% is 1% Round to two decimal places.

Explanation / Answer

MIRR can be calculated using MIRR function in excel

Cash Flows for the project are: -10.5, 3.8...3.8, -6, 6...6

In excel MIRR = MIRR(-10.5...6, 14%, 14%) = 19.48%

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