Question

Cash flow of a project for the next seven years is given for 0,1,2,3,4,5,6,7 years as follows(in RS lakh)-(25),10,8,(30),25,15,(5),45 Calculate MIRR. take 15%disvount​

Answer 1

Answer:

Explanation:

Years                cash flow in lakhs

0                                   -25

1                                     10

2                                    8

3                                     -30    

4                                      25

5                                        15

6                                        -5

7                                         45

To calculate MIRR = √FV/pv -1

Assuming investment and finance rate 10 %

To calculate PV of negative cashflows

PV of negative cash flows = -25+ (-30/1+10%) +-5 /1+10%)

                                            = - 50.36

Calculation of FV (positive) cash flows = 10(1+ 10%)+ 8(1+ 10%) + 25(1+ 10%)+ 15(1+ 10%)+ 45

= 127.025

MIRR = √FV/pv -1

             =√ 127.025 / 50.36   -1

              = √2.52 - 1

              = 1.58 -1

              = 0.58