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Homework answers / question archive / Ingram Electric is considering a project with an initial cash outflow or 5800
Ingram Electric is considering a project with an initial cash outflow or 5800.000. This project is expected to have thinows of $350.000 per year in years 1. 2. andaThe company has a WACC of 1.25% which is used as its reinvestment rate. What is the project's modi ed internal rate of return (MIRR) Your answer should be between 11.00 and 13.72 rounded to 2 decimal places with no special characters
Ans 12.50
| Year | Cash Flows | FV Factor | Formula | Terminal Value | |
| 0 | -800000 | ||||
| 1 | 350000 | 1.172 | (1 + 8.25%)^(3-1) | 4,10,132 | |
| 2 | 350000 | 1.083 | (1 + 8.25%)^(3-2) | 3,78,875 | |
| 3 | 350000 | 1.000 | (1 + 8.25%)^(3-3) | 3,50,000 | |
| Total | 11,39,007 | ||||
| MIRR = | (Sum oF terminal Cash Flows/ Initial Investment)^1/n - 1 | ||||
| (1139007 / 800000)^1/3 - 1 | |||||
| (1139007 / 800000)^0.33333333 - 1 | |||||
| 12.50% |
