Question
Suppose a firm is considering two mutually exclusive equally risky projects with WACC = 10% and the following cash flows: 0 1 2 3 4
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 | $500 | $450 | $350 | $200 |
| Project Y | -$1,000 | $750 | $400 | $300 | $150 |
How can you calculate the MIRR for the project that maximizes shareholder value?
Compute the MIRR for project X
Compute the net present value of all cash inflow
Compute the future value of the NPV
Which project maximizes shareholder value
Which values I need to enter in HP10bII calculator to compute the MIRR
Finally, you can answer the question: The MIRR for the project that maximizes shareholder value. Either X or Y
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The Essential Nonprofit Fundraising Handbook
Authors: Michael A. Sand, Linda Lysakowski
1st Edition
1601630727, 978-1601630728
