Westwood Painting 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. $\begin{array}{lccccc}
\text { WACC: } & 12.25 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$
A) 13.42%
B) 14.91%
C) 16.56%
D) 18.22%
E) 20.04%

Question

Westwood Painting 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. $\begin{array}{lccccc}
\text { WACC: } & 12.25 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
 \text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$
A) 13.42%
B) 14.91%
C) 16.56%
D) 18.22%
E) 20.04%

Quizplus · Accepted Answer

$\begin{array}{lccccc}
\text { MACC: } & 12.25 \% & & & & \
\text { Cear } & 0 & 1 & 2 & 3 & 4 \
 \text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360\
\text { Compounded values } & & \$42431 & \$ 40320  & \$ 381.65 & \$ 360.00 
\end{array}$ 
TV = Sum of comp'ed inflows: $1,569.16
 $\begin{array}{ll}
\text { MIRR }=16.56 \% & \text { Found as discount rate that equates PV of TV to cost, discounted back 4 years   @WACC } \
\text { MIRR }=16.56 \% & \text { Alternative calculation using Excel's MIR.R function }
\end{array}$

Westwood Painting Co A) 1342% B) 14

Westwood Painting Co A) 1342%
B) 14