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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

MIRR Project A costs $1,000, and its cash flows are the same in Years 1 through 10. Its IRR is 16%, and its WACC is 8%. What is the project’s MIRR?

Summary Introduction

To calculate: MIRR of the given project.

Introduction:

Modified Internal Rate of Return (MIRR):

It refers to the rate of return that is computed by the company to make a decision regarding the selection and ranking of a project for investment. This is a modified version of the IRR with reinvestment of cash flows at the cost of capital.

Explanation

Given information:

Cost of the project is $1,000.

Life of the project is 10 years.

IRR of the project is 16%.

Cost of capital of the project is 8%.

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