You are evaluating an investment project, Project ZZ, with the following cash fl

ID: 2766797 • Letter: Y

Question

You are evaluating an investment project, Project ZZ, with the following cash flows:

Period Cash flow

0 - $100,000

1 35,027

2 35,027

3 35,027

4 35,027

Calculate the following:

(a) Payback period

(b) Discounted payback period, assuming a 10% cost of capital

(d) Net present value, assuming a 10% cost of capital

(e) Net present value, assuming a 16% cost of capital

(f) Profitability index, assuming a 10% cost of capital

(g) Profitability index, assuming a 16% cost of capital

(h) Internal rate of return

(i) Modified internal rate of return, assuming reinvestment at 0%

(j) Modified internal rate of return, assuming reinvestment at 10%

I solved from a to h, i want only i and j

i.The MIRR is calculated using MIRR(cash flow, finance rate, reinvestment rate) in excel

Snce the reinvestment rate is 0%, we assume finance rate = 0%

j. The MIRR at refinancing rate of 10% is calculated as follows:

Year Cash flow 0 -100000 1 35027 2 35027 3 35027 4 35027 MIRR 8.80%

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