Doak Corp. is evaluating a project with the following cash flows: Year           Cash Flow 0                   -15,300 1                      6,400 2                      7,600 3                      7,200 4                      6,000 5                    -3,400 The company uses an interest rate of 9 percent on all its projects. Calculate the MIRR of the project using all three methods. Discounting approach  ____________% Reinvestment approach ___________% 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
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Doak Corp. is evaluating a project with the following cash flows:

Year           Cash Flow

0                   -15,300

1                      6,400

2                      7,600

3                      7,200

4                      6,000

5                    -3,400

The company uses an interest rate of 9 percent on all its projects. Calculate the MIRR of the project using all three methods.

Discounting approach  ____________%

Reinvestment approach ___________%

Combination approach ____________%

Expert Solution
Step 1

MIRR[(-15300 *1) -3400/(1.09)5, 6400,7600,7200,6000,0]

          [-15300 -3400/1.53862 ,6400,7600,7200,6000,0]

          [ -17509.77,6400,7600,7200,6000,0] = 14.17%

 

 

          

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