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Hi,
When calculating the Present value of return phase in MIRR, why is the answer when discounting all the cash inflows at 10% (i.e 11 188) different from $14133? Why can’t we take $11 188 for calculation of MIRR?
Thank you.
I have no idea where you are getting 11,188 from. If you discount the cash flows given in the question at 10% it does come to a present value of 14,133.
(given that the question does give the NPV as 2,293, and we know that the initial cost is 11,840, then it is quicker to do what the examiner has done and get the PV of the flows as 11,840 + 2,293 = 14,133, but there is no problem discounting them in the normal way. Check again, because the PV does come to 14,133 🙂 )
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