11.

a. Estimate the NPV of each project, assuming a cost of capital of 10 percent. Which is the better project?

b. Estimate the IRR for each projecr. Which is the better project,

c. What reinvestment rate assumptions are made by each of these rules? Can you show the effect on future flows of these assumptions?

d. What is the MRR on each of these projects?

Year Cash Flow to Equity ($) -5,000,000 4,000,000 4,000,000 -3,000,000 1 NO 3 1. Plot the NPV profile for this project. What is the IRR? If the cost of equity is 16%, would you accept this project? 10. Estimate the MIRR for the project described in Problem 8. Does it change your decision on accepting this project? 11. You are analyzing two mutually exclusive projects with the following cash flows: Year B 0 1 2 3 -$4,000,000 $2,000,000 $1,500,000 $1,250,000 $1,000,000 -$4,000,000 $1,000,000 $1,500,000 $1,700,000 $2,400,000 4 a. Estimate the NPV of each project, assuming a cost of capital of 10%. Which is the better project