Question
MIRR and NPV Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y
MIRR and NPV
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:
| Year | X | Y | ||
| 0 | -$5,000 | -$5,000 | ||
| 1 | 1000 | 4,500 | ||
| 2 | 1500 | 1500 | ||
| 3 | 2000 | 1000 | ||
| 4 | 4000 | 500 | ||
The projects are equally risky, and their cost of capital is 15%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Round your answers to two decimal places. Project X % Project Y % Which project has the higher MIRR?
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Public Finance
Authors: John E. Anderson
2nd edition
978-0538478441, 538478446, 978-1133708360, 1133708366, 978-1111526986
