Watts Co. is considering a project that has the following cash flow and cost of capital (r) data. What is the project's MIRR? Note that a project's MIRR can be less than the cost of capital (and even negative), in which case it will be rejected. $\begin{array} { l c c c c c }
& r = 10.00 \% \
\text { Year } &0& 1 & 2 & 3 & 4 \
\text { Cash flows } & - \$ 850 & 300 & 320 & 340 & 360
\end{array}$

Question

Watts Co. is considering a project that has the following cash flow and cost of capital (r) data. What is the project's MIRR? Note that a project's MIRR can be less than the cost of capital (and even negative), in which case it will be rejected. $\begin{array} { l c c c c c } 
& r = 10.00 \% \
\text { Year } &0& 1 & 2 & 3 & 4 \
\text { Cash flows } & - \$ 850 & 300 & 320 & 340 & 360
\end{array}$

Quizplus · Accepted Answer

$\begin{array} { l c c c c c } 
\text { WACC: } & 10.00 \% & & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & - \$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360 \
\text { Compourded values } & & \$ 399.30 & \$ 387.20 & \$ 374.00 & \$ 360.00
\end{array}$ 
TV = Sum of comp'ed inflows: $1,520.50
 $\begin{array}{ll}
\text { MIRR }=15.65 \% & \text { Found as discount rate that equates PV of TV to cost, discounted } \
&\text { back 4 years@,WACC } \
\text { MIRR }=15.65 \% & \text { Alternative calculation, using Excel's MIRR function }
\end{array}$

Watts Co Is Considering a Project That Has the Following Cash