Lecture 16 - MIRR eg

I can't find these figures. Are you using the latest notes? I do not have earlier versions. The idea,is to discoumt outflows back to the present and project inflows to the future. The project is then represented by two flows: an outflow at time 0 and an inflow at time 4 (say). Ar MIRR the NPV of these is zero, so Time 0 flow = Time 4 flow x 4 yr DC factor. 4 yr DC factor = Time 0 flow/Time 4 flow.

Dear Sir, I listened to the online lectures (video recordings) in which there is this example. I understand the rationale of doing MIRR, however, i do not know why do we have to take (Time 4 flow * 4 yr DC factor) and not take (Time 4 flow divide by Discount of 4 yrs) to get present value since the formula is FV = PV (1+i)^n. Thanks!

Hi Joanna, I think that the formula that you are refering to is the same as that of Ken Garret. PV=FV/(1+I)^n which is the same with Time 4 flow*4 year DC factor. Just the 4year DC factor =1/(1+i)^4. Hope this helps ,

It depends whatmyou mean by 'discoumt factor' To discount a time 3 flow at 10% you divide the time 3 flow by 1.1^3 This is the same as multiplying the time 3 figure by 1/1.1^3 ie multiply by 0.751.