Turnbull Corp. is in the process of constructing a new plant at a cost of $30 million. It expects the project to generate cash flows of $13,000,000, $23,000,000, and 29,000,000 over the next three years. The cost of capital is 20 percent. What is the MIRR on this project? (Do not round intermediate computations. Round final answer to the nearest percent.)
A) 36%
B) 37%
C) 38%
D) 39%

Question

Quizplus · Accepted Answer

The MIRR is 36%. The MIRR is the internal rate of return (IRR) of the project's cash flows, adjusted for the cost of capital. The IRR is the discount rate that makes the net present value (NPV) of the project equal to zero. The NPV is the sum of the present values of the project's cash flows, discounted at the cost of capital. In this case, the IRR is 36%.