Suppose a firm is considering two mutually exclusive equally risky projects with WACC 10% and the following cash flows: 0 1 2 3 4 Project X $1,000 Project Y $500 $450 -$1,000 $750 $400 $350 $200 $300 $150 How can you calculate the MIRR for the project that maximizes shareholder value? Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X CF CF CF CF CF Input Keystroke Output 450 350- Arrow down A wn Arrow down Arrow down Arrow down IRR 200 350 MIRR Suppose that your calculator does not 450 e ability to compute the MIRR. Here are the steps you need to take to calculate the MIRR for Project Y. 500 Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should ente to compute the MIRR for Project X. CF Input Keystroke Output CF 450-> CF CF3 CF 350 Arrow down Arrow down A wn Arrow down Arrow down IRR I MIRR 200 350 450 Suppose that your calculator does not have the ability pute the MIRR. Here are the steps you need to take to calculate the MIRR for Project Y. 500 Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X CP CF CF2 CF CF Input Keystroke Output 450 350-> Arrow down Arrow down Arrow down Arri Arrow down IRR I MIRR 200 350 Suppose that your calculator does not have the ability to compute the 450 ere are the steps you need to take to calculate the MIRR for Project: Y. 500 Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X CP CF CF CF CF. Input Keystroke Output 450 350 Arrow down Arrow down Arrow down Arrow down Arr IRR 200 350 MIRR Suppose that your calculator does not have the ability to compute the MIRR. Here are 450 ps you need to take to calculate the MIRR for Project 500 Assuming that your pro sional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X. CF CF Input Keystroke Output 450- CF 350- CF CF4 Arrow down Arrow down Arrow down Arrow down Arrow down IRR I MIRR 15.75 Suppose that your calculator does not have the ability to compute the MIRR. Here are the steps y o take to calculate the MIRR for Project 18.36 21.70 30.21 Assuming that your professional financial calculator is able to calculate the MIRR, use the following table to indicate which values you should enter to compute the MIRR for Project X. CP Input Keystroke Output CF 450- CF 350- CF, CF Arrow down Arrow down Arrow down Arrow down Arrow down IRR MIRR 15.75 Suppose that your calculator does not have the ability to compute the MIRR. Here are the steps you need to take to calculate the MIRR ct 18.36 Y 21.70 30.21 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF CF2 CF, CF Input Keystroke Arrow down Arr Arrow down Arrow down Arrow down I/Y NPV 150 Output 300 400 750 2. Use the following table to indicate wh des you should enter to compute the future value of the NPV Input Keystroke Output N 1/Y PV PMT FV 3. Use the following table to indicate which values you should enter to compute the MIRR Input Keystroke Output N PV PMT IV 1/Y Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF CF, CF3 CF Input Keystroke Output Arrow down Arrow down. Arri Arrow down Arrow down I/Y NPV 150 300 400 750 2. Use the following table to indicate which values you nter to compute the future value of the NPV Input Keystroke N I/Y PV PMT FV Output 3. Use the following table to indicate which values you should enter to compute the MIRR Input Keystroke N PV PMT FV I/Y Output Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF CF CF, CF Input Keystroke Output Arrow down Arrow down Arrow down Arri Arrow down 1/Y NPV 150 2. Use the following table to indicate which values you should enter tol 300 400 750 Je the future value of the NPV. Input Keystroke N I/Y PV PMT FV Output 3. Use the following table to indicate which values you should enter to compute the MIRR. Input Keystroke Output N PV PMT FV 1/Y Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CFo CF CF CF, CF Input Keystroke Output Arrow down Arrow down Arrow down Arrow down Arr I/Y NPV 150 300 2. Use the following table to indicate which values you should enter to compute the ful 400 750 lue of the NPV Input Keystroke N I/Y PV PMT FV Output 3. Use the following table to indicate which values you should enter to compute the MIRR. Input Keystroke N PV PMT FV I/Y Output Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF CF2 CF CF Input Keystroke Output Arrow down Arrow down. Arrow down Arrow down Arrow down I/Y NPV -1340.24 -1000 2. Use the following table to indicate which values you should enter to compute the future value of the NPV 1340.24 Input Keystroke N 1/Y PV PMT FV Output 3. Use the following table to indicate which values you should enter to compute the MIRR Input Keystroke: N PV PMT FV 1/Y Output Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1962.25 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF CF CF3 CF Input Keystroke: Output Arrow down Arrow down Arrow down Arrow down Arrow down 1/Y NPV 2. Use the following table to indicate which values you should enter to compute the future value of the NPV Input Keystroke Output N I/Y PV FV 1340.24 -1000 3. Use the following table to indicate which values you should enter tou 150 1340.24 MIRR. Input Keystroke N PV PMT FV I/Y Output Finally, you can answer the question: The MIRR for the project maximizes shareholder value. 1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows. CF CF1 CF CF3 CF Input Keystroke Output Arrow down Arrow down. Arrow down Arrow down Arrow down I/Y NPV 2. Use the following table to indicate which values you should enter to compute the future value of the NPV. Input Keystroke Output N I/Y PV PMT FV -1340.24 -1000 3. Use the following table to indicate which values you should enter to compute the MIRR 1340.24 1962.25 Input Keystroke N PV PMT FV I/Y Output Finally, you can answer the question: The MIRR for the project, maximizes shareholder value. CF CF CF2 CF CF Input Keystroke Output Arrow down Arrow down Arrow down Arrow down Arrow down I/Y NPV 2. Use the following table to indicate which values you should enter to compute the future value of the NPV Input Keystroke Output N 1/Y PV PMT FV 3. Use the following table to indicate which values you should enter to compute the MIRR Input Keystroke Output N PV PMT I/Y 1340.2 -1000 Finally, you can answer the question: The MIRR for the project ma eholder value. 1340.24 1962.25 Desativas Modified Internal Rate of Return Output 2. Use the following table to indicate which values you should enter to compute the future value of the NPV. Input Keystroke Output N I/Y PV PMT FV 3. Use the following table to indicate which values you should enter to compute the MIRR Input Keystroke Output N PV PMT FV I/Y 0.10 Finally, you can answer the question: The MIRR for the project maximizes shareholder 15.75 Step 3: Practice: Modified Internal Rate of Return Now it's time for you to practice what you've learned. 18.36 19.17 Output Finally, you can answer the question: The MIRR for the project Step 3: Practice: Modified Internal Rate of Return X maximizes shareholder value.