According to the video, the calculations of the IRR is based on the assumption that cash flows can be reinvested at:

the IRR.

the MIRR.

the NPV$.$

the WACC.

Follow these steps describing how the MIRR is calculated to complete the table for Project X$.$

$$ The Project X has just one outflow: $$$$1,000$ at t$=0$

$,$ this means that it is not discounted and its PV $=$$$1,000$

$.($Note: If the project has more than one outflow, you need to find the PV at t$=0$

for each one and sum them to arrive at the PV of total costs for use in the MIRR calculation.$)$

$$ You need to find the future value of each inflow compounded at the WACC out to the terminal year, which is the year the last inflow is received. $($Hint: Assume that cash flows are reinvested at the WACC.$)$

$$ You have the cost at t $=0,$$$1,000$

$,$ and the FV

$.$ There is some discount rate that will cause the PV of the terminal value to equal the cost. That interest rate is defined as the MIRR. $($Note: Using your financial calculator, enter N$=4$

$,$ PV$=1,000$

$,$ PMT$=0$

$,$ and FV

$.$ Then when you press the I$/$YR

key, you get the MIRR. Some calculators have a built$-$in MIRR function that streamlines the process. In Excel, you can use either the RATE function or MIRR function to calculate the MIRR.$)$

Project X

$0$

$1$

$2$

$3$

$4$

WACC $=15\%$

Inflow $-$$$1,000$ $$800$ $$750$ $$650$ $$500$

Complete the following table.

NPV $=$

FV $=$

MIRR $=$