Respuesta :
Hindeling inc is considering a project that has the following cash flow and WACC data. The project's MIRR is 16.56%.
WACC: 12.25%
Year 0 1 2 3 4
Cash flows: $85 $300 $320 $340 $360
cumulative values $424.31 $403.20 $381.65 $360.00
TV = Total Compound Inflows, which equals $1,569.16
MIRR = 16.56% a discount rate that compares the PV of TV to the cost, discounted back 4 years, was discovered. MIRR = 16.56% Using the MIRR tool in Excel as an alternative calculation.
The modified internal rate of return (MIRR) assumes that the firm's financing costs are used to support initial investments and that positive cash flows are reinvested at the firm's cost of capital.
Contrarily, the conventional internal rate of return (IRR) assumes that project cash flows will be reinvested at the IRR. The cost and profitability of a project are therefore best represented by the MIRR.
To know more about MIRR:
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Correct question:
Hindelang Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note that a project's projected MIRR can be less than the WACC (and even negative), in which case it will be rejected. WACC: 12.25% Year 0 1 2 3 4 Cash flows -$850 $300 $320 $340 $360
