# *Precision *Financial Calculator

#### Example V-2 __Verify Reinvestment Interest Rate__

If you reinvest the incomes from a project at the rate of IRR of that project, what will be the results? If you reinvest the incomes from a project at the rate of a discount rate you assigned at the beginning, what will be the results?

**[Solution] **

Create yearly cash flows: -1000,300,300,300,300 and select 3% as the discount
rate. This gives you IRR=7.71%, NPV=$115.
Now, go to Reinvestment tab, type in 7.71 in the Reinvestment Interest Rate
box. The MIRR will be the same as 7.71% - the net
IRR will be the same if you reinvest at the same IRR rate.

Next, type in 3 in the Reinvestment Interest Rate box. The Modified NPV @
3% will remain the same as $115 - the net NPV will be the same if you reinvest
at the same discount rate.

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