MIRR for a Projects Cost of Capital
Consider the following project.
0 1 2 3 4
|----------------|---------------|---------------|---------------|
- 1000 300 500 200 300
Project's cost of capital = 11%
a) Find the MIRR of the project.
b) Is this project acceptable? Why?
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In MIRR the intermediate cash flows are compounded at the cost of capital to the terminal year and then we find the rate that will make the PV of terminal year cash flow equal to the initial investment. MIRR can be calculated using the MIRR function in excel. The manual method is
Step 1 - Compound the intermediate cash flows to terminal year at cost of capital
The ...
Solution Summary
The solution explains how to calculate the MIRR of the project and determine if the project is acceptable
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