A project has an initial cost of 62725 expected net cash inf

A project has an initial cost of $62,725, expected net cash inflows of $14,000 per year for 7 years, and a cost of capital of 10%. What is the project\'s MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

Solution

Present Value of Outflow = $ 62,725

Present Value of Inflows = 14,000 * 1/ (1.10) ^ 1 +14,000 * 1/ (1.10) ^ 2 +14,000 * 1/ (1.10) ^ 3+....+14,000 * 1/ (1.10) ^ 7

= $ 68,157.86

Future  Value of Inflows = Present  Value of Inflows * ( 1+ Rate of Interest ) ^ Time

= $ 68,157.86 * ( 1+10/100) ^ 7

= $ 132,820.3873

MIRR=[Future value of inflows/Present value of outflow]^(1/n)-1

= [ $ 132,820.3873 / 62,725 ] ^ ( 1/7) -1

= 11.31310469

Hence the correct answer is 11.31 %