Business executives often prefer to work with (-Select-dollar ,percentage ) rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is:

While the IRR's reinvestment rate assumption is the IRR, the MIRR's reinvestment rate assumption is the project's (-Select-WACC,NPV,MIRR ). As a result, the MIRR is generally a better indicator of a project's true ( -Select-breakeven , liquidity, risk, profitability ) than IRR. Unlike the IRR, there can - Select-always, never )be more than one MIRR, and the MIRR can be compared with the project's - ( Select-WACC, NPV , cost ) when deciding to accept or reject projects. For (-Select-dependent, independent ) projects, the NPV, IRR, and MIRR always reach the same accept/reject conclusion; so the three criteria are equally good when evaluating ( -Select-dependent, independent ) projects. If projects are mutually exclusive and they differ in size, conflicts in project acceptance -( Select-cannot, can ) arise. In these cases, the (-Select-IRR,NPV,MIRR) is the best decision method because it selects the project that maximizes firm value.

What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

%

What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

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If the projects were independent, which project(s) would be accepted according to the MIRR method?

-Select-Neither, Project A , Project B , Both projects A and B

If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method?

-Select-Neither ,Project A ,Project B ,Both projects A and B

5. The Basics of Capital Budgeting: MIRR Business executives often prefer to work with rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is: t=0N(1+r)tCOFt=(1+MIRR)Nt0NCIFt(1+r)NtPVcosts=(1+MIRR)NTV While the IRR's reinvestment rate assumption is the IRR, the MIRR's reinvestment rate assumption is the project's . As a result, the MIRR is generally a better indicator of a project's true than IRR. Unlike the IRR, there can three criteria are equally good when evaluating projects. If projects are mutually exclusive and they differ in size, conflicts in project acceptance arise. In these cases, the is the best decision method because it selects the project that maximizes firm value. What is Project A's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % What is Project B's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. % If the projects were independent, which project(s) would be accepted according to the MIRR method? If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method? -Select