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mr_godi [17]
4 years ago
12

Wiley's Wire Products is considering a project that has the following cash flow and cost of capital (r) data. What is the projec

t's MIRR? Note that a project's MIRR can be less than the cost of capital (and even negative), in which case it will be rejected. r = 11.00%
Year 0 1 2 3
Cash flows −$800 $350 $350 $350

Options:
a. 13.50%
b. 8.86%
c. 12.15%
d. 9.84%
e. 10.94%
Business
1 answer:
Luden [163]4 years ago
4 0

Answer:

The correct option is A,13.50%

Explanation:

The Modified Internal Rate of Return can be computed using the excel function known as MIRR,that =MIRR(values,finance rate,re-investment rate )

the values are the cash flows from year 0 to year 3

the finance rate is not unknown in this scenario,hence it is assumed to zero

the re-investment rate is 11% as given in this question

Years   cash flows

0               -$800

1                 $350

2                $350

3                $350

=mirr(cash flows,0%,11%)

MIRR=13.50%

Kindly find attached spreadsheet which contains the calculation as well.

The correct option is A

Download xlsx
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