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MIRR discount rate

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › MIRR discount rate

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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    Posts
  • September 4, 2019 at 9:32 am #544650
    Anonymous
    Inactive
    • Topics: 5
    • Replies: 4
    • ☆

    Hello,

    I have an exercise in which I need to calculate IRR & MIRR.
    While calculating IRR I used 10% & 15% to end up with IRR of, let’s say 13%.

    Which rate I should use to calculate MIRR with help of standard MIRR equation:

    [PVR/PVI]*1/n*(1+r)-1

    …and if it is IRR, I assume that I must calculate PV of inflows/outflows with that rate as well…correct?

    Thank you in advance for your help!

    Regards,
    PJ

    September 4, 2019 at 12:10 pm #544701
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54821
    • ☆☆☆☆☆

    For the MIRR the rate you use in the formula is the cost of capital (not the IRR).

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