Question

What is the Modified Internal Rate of Return (MIRR) of a project with the following cash flows? The discounting rate is 12%.

Year Cash Flow
0 -1,200,000
1 400,000
2 500,000
3 500,000
4 500,000
5 500,000

a. 9.90%
b. 23.49%
c. 20.72%
d. 23.02%
e. 16.62%
f. 34.35%
g. 20.26%

Answer 1

Answer:

g. 20.26%

Explanation:

The computation of the MIRR is as follows;

Here we applied the MIRR formula in an excel

Year    Cash flow

0        -1,200,000

1          400,000

2         500,000

3         500,000

4         500,000

5         500,000

After applying the MIRR formula, the MIRR is 20.26%

Therefore the correct option is g.