PART A:

O'Donnell Inc. has a required rate of return of 11.5 percent. The company has a project with the following cash flows:

Year

Cash flow

0

$200

1

235

2

65

3

300

What is the project's modified internal rate of return (MIRR)? choose the correct choice.

a.39.87%

b.36.27%

c.40.15%

d.28.15%

e.32.90%

PART B:

Two projects being considered are mutually exclusive and have the following projected cash flows:

Year

Project A

Project B

0

$50,000

$ 50,000

1

15,990

0

2

15,990

0

3

15,990

0

4

15,990

0

5

15,990

100,560

At what rate (approximately) do the NPV profiles of Projects A and B cross? Choose the correct choice.

a.6.5%

b.11.5%

c.16.5%

d.20.0%

e.The NPV profiles of these two projects do not cross.