Slow Ride Corp. is evaluating a project with the following cash flows: the compa

Question

Slow Ride Corp. is evaluating a project with the following cash flows: the company uses a 10 percent interest rate on all of its projects. Calculate the MIRR of the project using the discounting approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places, (e. g. , 32. 16)) Calculate the MIRR of the project using the reinvestment approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places, (e. g. , 32. 16)) Calculate the MIRR of the project using the combination approach method. (Do not round intermediate calculations and round your final answer to 2 decimal places, (e. g. , 32. 16))

Explanation / Answer

Hi, Please find the answer as follows: Part A: Time 0 Investment = -29000 - 9400/(1+.10)^5 = 34836.66 0 = - 34836.66 + 11200/(1+r)^1 + 13900/(1+r)^2 + 15800/(1+r)^3 + 12900/(1+r)^4 = Solving for r = 19.29% Part B: Time 5 Cash Flow = 11200/(1+.10)^4 + 13900/(1+.10)^3 + 15800/(1+.10)^2 + 12900/(1+.10)^1 - 9400 = 33478.15 MIRR = 0 = -29000 + 33478.15/(1+MIRR)^5 = (33478.15/29000)^1/5 - 1 = -7.69% Part C: Time 5 Cash Flow = 42878.15 Time 0 Cash Flow = 34836.66 MIRR = 0 = - 34836.66 + 42878.15/(1+MIRR)^5 MIRR = (42878/34836.66)^1/5 - 1 = -7.54 Thanks,

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