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    Modified Internal Rate of Return (MIRR)

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    I am considering the following project. The project has an up-front cost and will also generate the following subsequent cash flows:

    t=1 $400, t=2 $500, t=3 $200

    The project's payback is 1.5 years, and it has a cost of capital of 10 percent.

    What is the project's modified internal rate of return (MIRR)?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:16 pm ad1c9bdddf

    Solution Preview

    See attached Excel worksheet.

    Step 1: Calculate the initial up front cost

    payback period= 1.5 years
    Therefore upfront cost= Year 1 cash flow + 0.5 x Year 2 cash flow= $650 =400+0.5*500

    Thus the cash flow ...

    Solution Summary

    Calculates Modified Internal Rate of Return (MIRR) for a project.