Share
Explore BrainMass

IRR and MIRR Calculations

The new project has a cost of $52,125, its expected net cash inflows are $12,000 per year for 8 years, and its WACC is 12 percent. What is the project's IRR and MIRR and Discounted Payback?

Solution Preview

IRR and MIRR and Discounted Payback
The new project has a cost of $52,125, its expected net cash inflows are $12,000 per year for 8 years, and its cost of capital and its cost of capital is 12 percent.

Please show your work!

What is the project's IRR and MIRR and Discounted Payback?
The internal rate of return is defined as that discount rate which equates the present value of a project's expected cash inflows to the present value of the project's costs:

PV(Inflows) = PV(Investment costs), or the rate which forces the NPV to equal zero.

NPV = sum of CFt where CF is the cash flow
(1 + IRR)n IRR is the internal rate of return
n is the period.

NPV = -52,125 + 12,000 + ...

Solution Summary

This solution is comprised of a detailed explanation to answer what is the project's IRR and MIRR and Discounted Payback.

$2.19