Project L costs $50,000, its expected cash inflows are $8,000 per year for 8 years, and...

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Project L costs $50,000, its expected cash inflows are $8,000 per year for 8 years, and...

Project L costs $50,000, its expected cash inflows are $8,000 per year for 8 years, and its WACC is 10%. What is the project's MIRR? Round your answer to two decimal places. Do not round your intermediate calculations. %

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Answer 1

Answer #1

Future value of annuity=Annuity[(1+rate)^time period-1]/rate

=8000[(1.1)^8-1]/0.1

=8000*11.4358881

=91487.1048

MIRR=[Future value of annuity/Present value of outflows]^(1/time period)-1

=[91487.1048/50,000]^(1/8)-1

=7.84%(Approx).

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Answer 2

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