Rent-to-Own Equipment Co.is considering a new inventory system that will cost $750,000.The system is expected to generate positive cash flows over the next four years in the amounts of $350,000 in year one,$325,000 in year two,$150,000 in year three,and $180,000 in year four.Rent-to-Own's required rate of return is 8%.What is the modified internal rate of return of this project?

Question

Quizplus · Accepted Answer

The modified internal rate of return (MIRR) considers the cost of investment and the interest earned on reinvestment of cash. Using the given cash flows and a required rate of return of 8%, the MIRR is calculated to be approximately 11.57%.

Rent-To-Own Equipment Co