Los Angeles Lumber Company (LALC) is considering a project with a cost of $1,000 at Year 0 and inflows of $300 at the end of Years 1-5. LALC's cost of capital is 10 percent. What is the project's modified IRR (MIRR) ?

MIRR = 12.9%

Explanation:

You can do this on excel using the '=MIRR' function. Enter the following cashflows on excel;

Initial investment; CF0 = - 1,000

Year 1 cashflow; C01 = 300

Year 2 cashflow; C02 = 300

Year 3 cashflow; C03 = 300

Year 4 cashflow; C04 = 300

Year 5 cashflow; C05 = 300

Rate = 10%

then type in " = MIRR ", and the function will pop up, select it and highlight all the cells with the above cashflows, use 10% as finance rate & reinvestment rate and press "ENTER". The MIRR would be; 12.9%