Problem $10\mathrm{.}22-$ Modified Internal Rate of Return $($MIRR$)$

PROBLEM

Morningside Bakeries recently purchased equipment at a cost of $$650,000.$

Management expects the equipment to generate cash flows of $$275,000$ in each

of the next four years. The cost of capital is $14$ percent.

PV of costs

Length of Project

Cost of Capital

Annual Cash Flows

$ $650,000\mathrm{.}00$

$4$ years

$14\%$

$$,275,000\mathrm{.}00$

Student Work Area

Required: Provide input into cells shaded in gray in this template.

Use the FV function with cell references to the Problem area in order to calculate the terminal

value of cash flows. Use the Rate function with cell references to the Problem area and

Student Work area to calculate the MIRR. Do not leave any portion of the formula for the

functions blank$-$ use $0\text{'}$s when necessary. Be sure to represent cash inflows as positive values.

What is the terminal cash flow for this project?

Terminal cash flow

What is the MIRR for this project?

MIRR

Answer Field:

$50\%$ of your score.

Function: Rate; Cell reference.

Use the Rate function, cell

referencing the amounts for the

NPER and PV from the Problem area

and the FV from the Student Work

area.

Give Excel formula with formula $-$ if there is no figure add $"0"$