Frazier Fudge has a project with an initial outlay of $40,000,followed by three years of annual incremental cash flows of $35,000.At the end of the third year,equipment will be sold producing additional cash flow of $10,000.Assuming a cost of capital of 10%,calculate the MIRR of the project.
A)46.5%
B)51.3%
C)62.9%
D)74.7%

Question

Quizplus · Accepted Answer

MIRR is the rate that equates the present value of the inflows to the present value of the outflows. In this case, the present value of the inflows is $100,000 and the present value of the outflows is $40,000. Therefore, the MIRR is 10%.

Frazier Fudge Has a Project with an Initial Outlay of $40,000,followed