A mining company plans to mine a beach for rutile.To do so will cost $10 million up front and then produce cash flows of $3 million per year for five years.At the end of the sixth year the company will incur shut-down and clean-up costs of $2 million.If the cost of capital is 11%,then what is the MIRR for this project?
A)8.52%
B)10.92%
C)11.03%
D)12.5%

Question

Quizplus · Accepted Answer

To calculate MIRR, we need to find the present value of all cash inflows and outflows at the cost of capital of 11% and then solve for the internal rate of return (IRR) of the resulting cash flow stream.

Using a financial calculator or Excel, we can calculate the MIRR to be 11.03%. Therefore, the best choice is option C.

A Mining Company Plans to Mine a Beach for Rutile