A mining company plans to mine a beach for rutile. To do so will cost $14 million up front and then produce cash flows of $7 million per year for five years. At the end of the sixth year the company will incur shut-down and clean-up costs of $6 million. If the cost of capital is 13.0%, then what is the MIRR for this project?
A) -60.97%
B) -78.39%
C) -87.10%
D) -95.81%

Question

Quizplus · Accepted Answer

C) Bring all negative cash flows to time 0;
thus, PV shut-down 11ea84dc_f555_96bd_9a63_39812c4353a9_TB1316_11_TB1316_11 11ea84dc_f555_96be_9a63_43e57960c19a_TB1316_11_TB1316_11 11ea84dc_f555_96bf_9a63_e329c9d7652c_TB1316_11_TB1316_11

A Mining Company Plans to Mine a Beach for Rutile