# FM11 25 - \$55,255,000 Step 3 Calculate MIRR A as follows...

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e. At a discount rate of 15%, NPV A = \$8,207,071. At a discount rate of 15%, NPV B = \$8,643,390. At a discount rate of 15%, Project B has the higher NPV; consequently, it should be accepted. f. Project = Year CF A - CF B 0 \$ 0 1 (15) 2 0 3 7 4 14 IRR = Crossover rate = 13.5254% 13.53%. g. Use 3 steps to calculate MIRR A @ r = 10%: Step 1: Calculate the NPV of the uneven cash flow stream, so its FV can then be calculated. With a financial calculator, enter the cash flow stream into the cash flow registers, then enter I = 10, and solve for NPV = \$37,739,908. Step 2: Calculate the FV of the cash flow stream as follows: Enter N = 4, I = 10, PV = -37739908, and PMT = 0 to solve for FV =
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Unformatted text preview: \$55,255,000. Step 3: Calculate MIRR A as follows: Enter N = 4, PV = -25000000, PMT = 0, and FV = 55255000 to solve for I = 21.93%. Use 3 steps to calculate MIRR B @ r = 10%: Step 1: Calculate the NPV of the uneven cash flow stream, so its FV can then be calculated. With a financial calculator, enter the cash flow stream into the cash flow registers, then enter I = 10, and solve for NPV = \$36,554,880. Step 2: Calculate the FV of the cash flow stream as follows: Enter N = 4, I = 10, PV = -36554880, and PMT = 0 to solve for FV = \$53,520,000. Answers and Solutions: 11 - 25...
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