A corporation is evaluating a project with the following cash flows: Year 0: -28700 Year 1: 10900 Year 2: 13600 Year 3: 15500 Year 4: 12600: Year 5: -9100 The company uses a discount rate of 12% and a reinvestment rate of 7% on its project: a) Calculate MIRR using the discounting approach. b) Calculate MIRR using the reinvestment approach c) Calculate MIRR using the combination approach.
A corporation is evaluating a project with the following cash flows: Year 0: -28700 Year 1: 10900 Year 2: 13600 Year 3: 15500 Year 4: 12600: Year 5: -9100 The company uses a discount rate of 12% and a reinvestment rate of 7% on its project: a) Calculate MIRR using the discounting approach. b) Calculate MIRR using the reinvestment approach c) Calculate MIRR using the combination approach.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A corporation is evaluating a project with the following cash flows:
Year 0: -28700
Year 1: 10900
Year 2: 13600
Year 3: 15500
Year 4: 12600:
Year 5: -9100
The company uses a discount rate of 12% and a reinvestment rate of 7% on its project:
a) Calculate MIRR using the discounting approach.
b) Calculate MIRR using the reinvestment approach
c) Calculate MIRR using the combination approach.
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