Question
Singing Fish Fine Foods has $2040000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the
Singing Fish Fine Foods has $2040000 for capital investments this year and is considering two potential projects for the funds. Project 1 is updating the store's deli section for additional food service. the estimated after-tax cash flow of this project is $580,000 per year for the next five years. Project 2 is updating the store's wine section. The estimated annual after-tax cash flow for this project is $490,000 for the next six years. The appropriate discount rate for the deli expansion is 9.3% and the appropriate discount rate for the wine section is 8.9%. What are the MIRRs for the Singing Fish Foods projects? What are the MIRRs when you adjust for unequal lives? Do the MIRR adjusted for unequal lives change the decision based on MIRRs? hint: take all cash flows to the same ending period as the longest project. If the appropriate reinvestment rate for the deli expansion is 9.3%, what is the MIRR of the deli expansion?
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