Project L costs $45,000, its expected cash inflows are $12,000 per year for 8 years, and...

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Project L costs $45,000, its expected cash inflows are $12,000 per year for 8 years, and...

Project L costs $45,000, its expected cash inflows are $12,000 per year for 8 years, and its WACC is 14%. 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

=12000[(1.14)^8-1]/0.14

=12000*13.23276016

=$158,793.1219

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

=[158,793.1219/45,000]^(1/8)-1

=17.07%(Approx).

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Answer 2

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