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Tisa (6/12)

BBrianH11y ago
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
BBrianH11y ago#1
BPP used the WACC as the discount factor
John MoffatJohn MoffatTutor11y ago#2
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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