A B C E F G H J K 1 Function: FV, Rate; Cell referencing 2 3 Problem 10.22 - Modified Internal Rate of Return (MIRR) 4 PROBLEM 5 Morningside Bakeries recently purchased equipment at a cost of 6 $650,000. Management expects the equipment to generate cash flows of 7 $275,000 in each of the next four years. The cost of capital is 14 percent. Student Work Area Required: Provide input into cells shaded in gray in this template. Use the FV function with cell references to the Problem area in order to calculate the terminal value of cash flows. Use the Rate function with cell references to the Problem area and Student Work area to calculate the MIRR. Do not leave any portion of the formula for the functions blank - use 0's when necessary. Be sure to represent cash inflows as positive values. 8 9 PV of Costs 10 Length of Project 11 Cost of Capital 12 Annual Cash Flows 13 14 15 16 17 18 19 $ 650,000.00 4 years 14% $275,000.00 What is the terminal cash flow for this project? Terminal cash flow What is the MIRR for this project? MIRR
A B C E F G H J K 1 Function: FV, Rate; Cell referencing 2 3 Problem 10.22 - Modified Internal Rate of Return (MIRR) 4 PROBLEM 5 Morningside Bakeries recently purchased equipment at a cost of 6 $650,000. Management expects the equipment to generate cash flows of 7 $275,000 in each of the next four years. The cost of capital is 14 percent. Student Work Area Required: Provide input into cells shaded in gray in this template. Use the FV function with cell references to the Problem area in order to calculate the terminal value of cash flows. Use the Rate function with cell references to the Problem area and Student Work area to calculate the MIRR. Do not leave any portion of the formula for the functions blank - use 0's when necessary. Be sure to represent cash inflows as positive values. 8 9 PV of Costs 10 Length of Project 11 Cost of Capital 12 Annual Cash Flows 13 14 15 16 17 18 19 $ 650,000.00 4 years 14% $275,000.00 What is the terminal cash flow for this project? Terminal cash flow What is the MIRR for this project? MIRR
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 35SP
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1 Function: FV, Rate; Cell referencing
2
3 Problem 10.22 - Modified Internal Rate of Return (MIRR)
4
PROBLEM
5 Morningside Bakeries recently purchased equipment at a cost of
6 $650,000. Management expects the equipment to generate cash flows of
7 $275,000 in each of the next four years. The cost of capital is 14 percent.
Student Work Area
Required: Provide input into cells shaded in gray in this template.
Use the FV function with cell references to the Problem area in order to calculate
the terminal value of cash flows. Use the Rate function with cell references to the
Problem area and Student Work area to calculate the MIRR. Do not leave any
portion of the formula for the functions blank - use 0's when necessary. Be sure to
represent cash inflows as positive values.
8
9
PV of Costs
10
Length of Project
11
Cost of Capital
12
Annual Cash Flows
13
14
15
16
17
18
19
$ 650,000.00
4 years
14%
$275,000.00
What is the terminal cash flow for this project?
Terminal cash flow
What is the MIRR for this project?
MIRR
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