Calculate the MIRR of the project using the discounting approach. (Do not round

Question

  

  

  

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.)

  

  

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.)

  

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.)

  

RAK Corp. is evaluating a project with the following cash flows:

Explanation / Answer

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Year (MIRR at Discount rate) 0 1 2 3 4 5 -28,600 10800 13500 15400 12500 -9000 Discount rate 13% PV factor 1 0.54276 PV factor=1/(1+r)^n PV of Cash Outflows -28,600 -4884.84 PV cash flow = Cash flow * Pv factor Total PV -33,485 FV factor 1.630474 1.442897 1.2769 1.13 FV factor =(1+r)^(5-n) FV of Cash Inflows 17609.11 19479.11 19664.26 14125 Fv cash flow Cash flow * FV factor Total FV 70877.48449 MIRR=(Total FV/-Total PV)^(1/5)-1 16.18% Year (MIRR at Reinvest rate) 0 1 2 3 4 5 -28,600 10800 13500 15400 12500 -9000 Reinvestment rate 6% PV factor 1 0.747258 PV factor=1/(1+r)^n PV of Cash Outflows -28,600 -6725.32 PV cash flow = Cash flow * Pv factor Total PV -35,325 FV factor 1.262477 1.191016 1.1236 1.06 FV factor =(1+r)^(5-n) FV of Cash Inflows 13634.75 16078.72 17303.44 13250 Fv cash flow Cash flow * FV factor Total FV 60266.90717 MIRR=(Total FV/-Total PV)^(1/5)-1 11.28% Year (MIRR at Combination) 0 1 2 3 4 5 -28,600 10800 13500 15400 12500 -9000 Discount rate 13% PV factor at discount rate 1 0.54276 PV factor=1/(1+ discount)^n PV of Cash Outflows -28,600 -4884.84 PV cash flow = Cash flow * Pv factor Total PV -33,485 Reinvestment rate 6% FV factor at reinvestment rate 1.262477 1.191016 1.1236 1.06 FV factor =(1+reinvetsment)^(5-n) FV of Cash Inflows 13634.75 16078.72 17303.44 13250 Fv cash flow Cash flow * FV factor Total FV 60266.90717 MIRR=(Total FV at reinvestment rate /-Total PV at discount rate)^(1/5)-1 12.47%

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