Question
Charlie's Coffee Company is considering two mutually exclusive projects. Below are the cash flows. Year Project 1 Project 2 0 -5,000 -5,000 1 1,000 4,500
Charlie's Coffee Company is considering two mutually exclusive projects. Below are the cash flows.
| Year | Project 1 | Project 2 |
|---|---|---|
| 0 | -5,000 | -5,000 |
| 1 | 1,000 | 4,500 |
| 2 | 1,500 | 1,500 |
| 3 | 2,000 | 1,000 |
| 4 | 4,000 | 500 |
Both of the projects cost of capital is 12%. What is your recommendation based on Modified IRR-MIRR (you must show your calculations)? Which project has the higher MIRR? What does that mean?
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Personal Finance
Authors: E Thomas Garman, Raymond Forgue
11th Edition
1111531013, 9781111531010
