Find the Modified Internal Rate of Return (MIRR)for the following series of future cash flows,given a discount rate of 9%: Year 0: -$18,000; Year 1: $4,000; Year 2: $5,500; Year 3: $3,000; Year 4: $9,500; and,Year 5: $2,000.
A)About 9.77%
B)About 10.88%
C)About 12.04%
D)About 13.12%

Question

Quizplus · Accepted Answer

MIRR considers the reinvestment rate of positive cash flows and the cost of capital for negative cash flows. In this case, the reinvestment rate is not provided, so we cannot calculate the MIRR accurately. However, if we assume a reinvestment rate of 9%, the MIRR is approximately 9.77%.

Find the Modified Internal Rate of Return (MIRR)for the Following