##### Financial management question

account_circle Unassigned
schedule 1 Day
account_balance_wallet \$5

MIRR

A project has the following cash flows:

 0 1 2 3 4 5
 -\$300 \$227 -\$X \$203 \$300 \$404

This project requires two outflows at Years 0 and 2, but the remaining cash flows are positive. Its WACC is 14%, and its MIRR is 15.36%. What is the Year 2 cash outflow? Round your answer to the nearest cent.

Oct 20th, 2017

Thank you for the opportunity to help you with your question!

PV = -300-X/(1.14)^2

FV = 404 +300*(1.14)+203*(1.14)^2+227*(1.14)^4 =  1393.21

MIRR =  (1393.21/(300+x/1.14^2))^1/5-1 = 0.1536

1393.21/(300+x/1.14^2) = 1.1536^5 = 2.043

300+x/1.14^2 = 1393.21/2.043 = 681.931

x/1.14^2 = 381.931

x = 496.36

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 30th, 2015

This is correct answer! Thank you!!!!!!

Jun 30th, 2015

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Oct 20th, 2017
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Oct 20th, 2017
Oct 20th, 2017
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