Suppose a firm is considering two mutually exclusive equally risky projects with WACC = 15% and the following cash flows:

	0	1	2	3	4
Project X	-$1,000	$800	$750	$650	$500
Project Y	-$1,000	$1,050	$700	$600	$450

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.

	CF0CF0	CF1CF1	CF2CF2	CF3CF3	CF4CF4
Input
Keystroke	Arrow down	Arrow down	Arrow down	Arrow down	Arrow down	IRR	I	MIRR
Output

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 for Project Y.

1. Use the following table to indicate which values you should enter to compute the net present value (NPV) of all cash inflows.

	CF0CF0	CF1CF1	CF2CF2	CF3CF3	CF4CF4
Input
Keystroke	Arrow down	Arrow down	Arrow down	Arrow down	Arrow down	I/Y	NPV
Output

2. Use the following table to indicate which values you should enter 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.