a. Find the total terminal value of the following cash flows when compounded at 15 per cent.

Question:

a. Find the total terminal value of the following cash flows when compounded at 15 per cent. Cash flows occur at annual intervals and the fourth year's cash flow is the last.

b. If £900 is the initial cash outflow at time 0, calculate the compounding rate that will equate the initial cash outflow with the terminal value as calculated in (a) above.
c. You have calculated the modified internal rate of return (MIRR), now calculate the IRR for comparison.

Internal Rate of Return
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