Watts Co.is considering a project that has the following cash flow and WACC data.What is the project's MIRR? Note that a project's MIRR can be less than the WACC (and even negative),in which case it will be rejected. $\begin{array}{lccccc}
\text { WACC: } & 10.00 \% & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$
A) 14.08%
B) 15.65%
C) 17.21%
D) 18.94%
E) 20.83%

Question

Watts Co.is considering a project that has the following cash flow and WACC data.What is the project's MIRR? Note that a project's MIRR can be less than the WACC (and even negative),in which case it will be rejected. $\begin{array}{lccccc}
\text { WACC: } & 10.00 \% & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
 \text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$
A) 14.08%
B) 15.65%
C) 17.21%
D) 18.94%
E) 20.83%

Quizplus · Accepted Answer

$\begin{array}{lccccc}
\text { WACC: } & 10.00 \% & & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360 \
\text { Compounded values } & & \$ 399.30 & \$ 387.20 & \$ 374.00 & \$ 360.00
\end{array}$ 
TV = Sum of comp'ed inflows: $1,520.50
 MIRR $= 15.65 \%$   &emsp;  &emsp;Faund as chiscunt rate that equuates $P V$ af $T V$ to cost, discaunted back 4yers @WACC
MIRR $= 15.65 \%$   &emsp;  &emsp;Alternative calculation, using Excel's MIRR Function

Watts CoIs Considering a Project That Has the Following Cash Flow