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Tisa (6/12)

This topic has 2 replies, 2 voices, and was last updated 10 years ago by John Moffat.

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April 8, 2015 at 12:42 pm #240509
BrianH
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Hi sir
Bpp solution for part b, MIRR calc….
Is it ok to use the IRR of 28% as the discount factor to calc the PVs for the cash flows?
Eg PV yr 2 = 1,153/1.28^2 = 704
Thanks
April 8, 2015 at 1:12 pm #240511
BrianH
Member
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BPP used the WACC as the discount factor
April 9, 2015 at 4:29 am #240591
John Moffat
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No – it is not OK to use the IRR.
The whole point of MIRR is to use the WACC – MIRR assumes reinvestment is at WACC whereas the conventional IRR assumes reinvestment is at the IRR.
(The free lecture on this may help you)
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