Project K costs 50000 its expected cash inflows are 12000 pe
Project K costs $50,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 10%. What is the project\'s MIRR? Round your answer to two decimal places.
Solution
Future value of annuity=Annuity[(1+rate)^time period-1]/rate
=$12000[(1.1)^8-1]/0.1
=$12000*11.4358881
=$137230.6572
MIRR=[Future value of inflows/Present value of outflows]^(1/time period)-1
=[$137230.6572/50000]^(1/8)-1
=13.45%(Approx).
