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. $$\begin{array} { l c c c c c }
& r = 10.00 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Cash flows } & - \$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$$
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 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. $$\begin{array} { l c c c c c } 
& r = 10.00 \% \
\text { Year } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Cash flows } & - \$ 850 & \$ 300 & \$ 320 & \$ 340 & \$ 360
\end{array}$$
A) 14.08%
B) 15.65%
C) 17.21%
D) 18.94%
E) 20.83%

Quizplus · Accepted Answer

The MIRR is calculated by finding the future value of positive cash flows at the cost of capital and the present value of negative cash flows, then finding the rate that equates these values over the project's life. The MIRR for this project is 15.65%.

Watts CoIs Considering a Project That Has the Following Cash Flow