RAK Corp. is evaluating a project with the following cash flows: Year Cash Flow
ID: 2789670 • Letter: R
Question
RAK Corp. is evaluating a project with the following cash flows:
Year Cash Flow
0 –$ 29,200
1 11,400
2 14,100
3 16,000
4 13,100
5 – 9,600
The company uses an interest rate of 9 percent on all of its projects. Calculate the MIRR of the project using the discounting approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %
Calculate the MIRR of the project using the reinvestment approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %
Calculate the MIRR of the project using the combination approach. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) MIRR %
Please show work!
Explanation / Answer
1. dicounted approach = in this all the negative cash flow discounted back to present at the required rate of return and added to initial cost , and then we find irr
2. re investment approach = all cash flow except the initial at year 0 are coumpounded to the end of project life and then calculate irr
3. combination approach = all negative cash flow are dicounted back to the present and all positive are coumpounded to the end of the project life
dicounted approach year 0 -35439.34131 90000+9600/(1.09)^5 1 11400 2 14100 3 16000 4 13100 5 irr= 19.18%Related Questions
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