Westwood Painting 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.
$\begin{array} { l c c c c c }
&r=12.25 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & - 850 & 300 & 320 & 340 & 360
\end{array}$

Question

Westwood Painting 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. 
$\begin{array} { l c c c c c } 
&r=12.25 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & - 850 & 300 & 320 & 340 & 360
\end{array}$

Quizplus · Accepted Answer

$\begin{array}{lccccc}
\text { WACC: } & 12.25 \% & & & \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\text { Cash flows } & -\$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360\
\text { Compounded values } & \$ 424.31 & \$ 403.20 & \$ 381.65 && \$ 360.00
\end{array}$ 
TV = Sum of comp'ed inflows: $1,569.16
 $\begin{array}{ll}
\text { MIRR }=16.65 \% & \text { Found as discount rate that equates PV of TV to cost, discounted } \
&\text { back 4 years@,WACC } \
\text { MIRR }=16.65 \% & \text { Alternative calculation, using Excel's MIRR function }
\end{array}$

Westwood Painting Co r=12.25% Year 01234 Cash flows −850300320340360\begin{array} { l c c c c c } &r=12.25 \% \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\text { Cash flows } & - 850 & 300 & 320 & 340 & 360\end{array} Year Cash flows ​r=12.25%0−850​1300​2320​3340​4360​

Westwood Painting Co $\begin{array} { l c c c c c } &r=12.25 \% \\\text { Year } & 0 & 1 & 2 & 3 & 4 \\\text { Cash flows } & - 850 & 300 & 320 & 340 & 360\end{array}$