Question

What is the MIRR of a project with the following cash flows? The WACC = 11.9%. Year 0 1 2 3 Cash Flow -100 50 50 50 Group of answer choices 19.0% 11.9% 23.4% Cannot be determined without knowing the IRR. CHEGG

Answer 1

Answer:

the MIRR of a project is 19.0%.

Explanation:

The First Step is to Calculate the Terminal Value at end of year 3.

Terminal Value (FV) = Sum of (PV x (1 + r) ^ 3 - n)

                   = $50 x (1.119) ^ 2 + $50 x (1.119) ^ 1 + $50 x (1.119) ^ 0

                   = $62.61 + $55.95 + $50.00

                   = $168.56

The Next Step is to Calculate the MIRR using a Financial Calculator :

-$100 CFj

0  CFj

0  CFj

$168.56  CFj

Shift IRR/Yr 19.0104%  or 19.0%

Therefore, the MIRR is 19.0%.