Question 19 5 pt Ingram Electric is considering a project wi

Question 19 5 pt Ingram Electric is considering a project with an initial cash outflow of 800,000. This project is expected to have cash inflows of $350,000 per year in years 1, 2, and 3. The company has a WAcr of 6.45% which is used as its reinvestment rate. What is the project\'s modified internal rate of return (MIRR)? Your answer should be between 11.00 and 13.72, rounded to 2 decimal places, with no special characters. 30 8

Solution

MIRR is 11.84%

Working;

Step-1:Calculation of future value of positive cash flows
	Year	Cash flow	Future Value of 1	Future Value of cash flow
	a	b	c=1.0645^(3-a)	d=b*c
	1	$      3,50,000	1.1332	$       3,96,606
	2	$      3,50,000	1.0645	$       3,72,575
	3	$      3,50,000	1.0000	$       3,50,000
		Total		$     11,19,181
Step-2:Calculation of modified internal rate of return
	Modified internal rate of return	=	((Future Value of positive cash flows/Present Value of negative cash flows)^(1/Life))-1
				=	((1119181/800000)^(1/3))-1
				=	11.84%