Ingram Electric is considering a project with an initial cash outflow or 5800.000. This project is expected to have

Question

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

Help In Homework · Accepted Answer

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%

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Ingram Electric is considering a project with an initial cash outflow or 5800

Expert Solution

Archived Solution

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%