Question

Swan Enterprises is considering a project that has the following cash flow and WACC data. What is the project's MIRR?

WACC=10.50%

Year	0	1	2	3	4
Cash Flows	-$850	$300	$320	$340	$360

Answer 1

Formula for Compounded value = Cash flows X (1+r)n
WACC =10.50%
Year	0	1	2	3	4	Total
Cash flows	-850	300	320	340	360
Compound values @ 10.50%		404.77	390.73	375.70	360.00	1531.20
Present value at factor in PV table at MIRR = 850/1531.20 =0.555121
Present value factor for 4 years at 15%			0.571753
Present value factor for 4 years at 16%			0.552291
MIRR should be in between 15% to 16%
Difference in PV factor between 15% and 16%			0.019462
Difference in PV factor between 15% and MIRR			0.016632
% of decimals after 15% (0.016632/0.019462)			0.85
So, MIRR is 15.85%