123
MIRR:
PV Costs = $52,125.
FV Inflows:
PV
FV
0
1
2
3
4
5
6
7
8









12,000
12,000
12,000
12,000
12,000
12,000
12,000
12,000
13,440
15,053
16,859
18,882
21,148
23,686
26,528
52,125
MIRR = 13.89%
147,596
Financial calculator:
Obtain the FVA by inputting N = 8, I/YR = 12, PV = 0, PMT =
12000, and then solve for FV = $147,596.
The MIRR can be obtained by inputting N =
8,
PV = 52125, PMT = 0, FV = 147596, and then solving for I = 13.89%.
124
PV = $12,000[(1/I)(1/(I*(1+I)
N
)]
= $12,000[(1/0.12)(1/(0.12*(1+0.12)
8
)]
= $59,611.68.
Financial calculator:
Find present value of future cash flows by inputting N = 8, I/YR =
12, PMT = 12000, FV = 0, then solve for PV = $59,611.68.
PI
= PV of future cash flows / Initial cost
= $59,611.68/$52,125 = 1.14.
125
Year
CF
Cumulative CF
0
52,125
52,125
1
12,000
40,125
2
12,000
28,125
3
12,000
16,125
4
12,000
4,125
5
12,000
7,875
6
12,000
19,875
7
12,000
31,875
8
12,000
43,875
12%