For the nonconventional net cash flow shown, determine the external rate of return using the MIRR method at a borrowing rate of 10% per year and an investment rate of (a) 15% per year, and (b) 30% per year.
 FIGURE 1.png)
Use MIRR function or hand solution.
(a) By hand, with ib = 10% and ii = 15%
PW0 = -7000 – 5000((P/F,10%,3)
= -7000 – 5000((0.7513)
= $-10,757
FW3 = 3000(F/P,15%,2) + 15,000(F/P,15%,1)
= 3000(1.3225) + 15,000(1.1500)
= $21,218
Find i? at which PW0 is equivalent to FW3
-10,757(F/P,i?,3) = 21,218
i' = (21,218/10,757)1/3 -1
= 0.254 (25.4% per year)
(b) By MIRR with ib = 10% and ii = 30%
i' = 31.7% per year
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