Question

Emann Systems is considering a project that has a cash flow as: (1,000), 450, 450, 450 for the years 0, 1, 2, 3 respectively. If WACC: 10 %, What is the project's MIRR?

Answer 1

the project's MIRR is 14,20%.

Step-by-step 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)

= 450 x (1.10) ^ 2 + 450 x (1.10) ^ 1 + 450 x (1.10) ^ 0

= 544.50 + 495.00 + 450.00

= 1,489.50

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

(1,000) CFj

0 CFj

0 CFj

1,489.50 CFj

Shift IRR/Yr 14,2037 %

Therefore, the MIRR is 14,20%.