Part One: Please help me fill in the blanks here!

1. Business executives often prefer to work with ______( dollar or percentage) rates of return, so to overcome some of the IRR's limitations the modified IRR was devised.

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

Part Two: Please Help me work out this exercise and answer the corrosponding questions.

Bellinger Industries is considering two projects for inclusion in its capital budget, and you have been asked to do the analysis. Both projects' after-tax cash flows are shown on the time line below. Depreciation, salvage values, net operating working capital requirements, and tax effects are all included in these cash flows. Both projects have 4-year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is 10%.

	0		1		2		3		4
Project A	-1,450		600		380		240		290
Project B	-1,450		200		315		390		740

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

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

If the projects were independent, which project(s) would be accepted according to the MIRR method? a. Neither b. Project A c. Project B d. Both Projects A and B

If the projects were mutually exclusive, which project(s) would be accepted according to the MIRR method? a. Neither b. Project A c. Project B d. Both Projects A and B