MIRR

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    michael13011991
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    for MIRR calculation:

    Investment phase= investment only (e.g; 600 invested for machinery) or investment less capital allowance

    Time of project: 1/n……is n equal to the duration of the project told (e.g; cash flows over 4 years) or do we use the entire duration (e.g; where because tax is paid 1 years in arrears-5 years)

    Finally, Issue cost pf finance (debt and equity)-do we include this in our cash flow forecast to find present value of return and investment phase?

    Note: The reason i asked is because several question in the BPP kit used but methods described about-so for december 2012, which one would our examiner perfer? thanks


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    dazhong0703
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    1) investment only, coz capital allowance is operating cash flow (after contribution)
    2) n= 4 years (project life)
    3) issue cost is financing side effect, separate beta, therefore not included


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    dazhong0703
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    I saw from OpenTuition notes, n= project life, but I did a question ‘Neptune’, n= project life + 1


    Avatar of johnmoffat
    John Moffat
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    n is the number of years of the project (as per the examiner).

    In Neptune the cash flows resulting from the project occur for six years.

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