Solo Corp. is evaluating a project with the following cash flows: Year Cash Flow 0 â€“$30,000...

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Solo Corp. is evaluating a project with the following cashflows: Year Cash Flow 0 â€“$30,000 1 12,200 2 14,900 3 16,800 413,900 5 â€“10,400
The company uses an interest rate of 8 percent on all of itsprojects.
Calculate the MIRR of the project using all three methods. a.MIRR using the discounting approach.
b. MIRR using the reinvestment approach.
c. MIRR using the combination approach.

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a Discounting Approach All negative cash flows are discounted back to the present at the required return and added to the initial cost Thus year 0 modified cash flow30000707807 3707807 Year 0 1 2 3 4 5 Cash flow stream 30000000 12200000 14900000 16800000 13900000 10400000 Discounting factor Using discount rate 1000 1080 1166 1260 1360 1469 Discounted cash flows 30000000 11296296 12774348 13336382 10216915 7078065 Modified cash flow 37078065 12200000 14900000 16800000 13900000 0000 Discounting factor using MIRR 1000 1198 1435 1720 2060 2469 See Answer

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