The initial cash outlay S65 900 and the discourate 12 percen

The initial cash outlay S65 900 and the discour-ate 12 percent s relying a prepect thats expected to have annual cash fo s of SAG 400 S5.300 and-$15,200 for Years 1 to 3. respecti ely 977% 66%

Solution

Year 1 2 Annual Cash Flows $46,400.00 $51,300.00 FV @ 12% 1.2544 1.1200 Future Value $58,204.16 $57,456.00 Future value of positive cash flows at the cost of capital $115,660.16 Year 0 1 2 3 Annual Cash Flows -$65,900.00 $0.00 $0.00 -$15,200.00 PV @ 12% 1.0000 0.8929 0.7972 0.7118 Present Value -$65,900.00 $0.00 $0.00 -$10,819.06 Present value of negative cash flows at the financing cost $76,719.06 MIRR = (Future Value of Positive Cash Flows at the Cost Of Capital of the Firm / Present Value of all Negative Cash Flows at the Financing Cost of the Firm)^(1/n) – 1 MIRR=(($115660.16/$76,719.06)^(1/3))-1 14.66%