The Basics of Capital Budgeting: Evaluating Cash Flows: MIRR

Business executives often prefer to work with percentage $vv$ rate of return, so to overcome some of the IRR's limitations the modified IRR was devised. The MIRR equation is:

${\displaystyle \underset{t=0}{\overset{N}{}}}\frac{CO{F}_t}{(1+r{)}^t}=\frac{{\displaystyle \underset{t-6}{\overset{N}{}}}CI{P}_t(1+r{)}^{N-t}}{(1+\text{M}\text{I}\text{R}\text{R}{)}^N}$

$PV$ costs $=\frac{TV}{(1+\text{M}\text{I}\text{R}\text{R}{)}^N}$

arise. In these cases, the NPV $$ is the best decision method because it selects the project that maximizes firm value.

cash flows. Both projects have $4-$year lives, and they have risk characteristics similar to the firm's average project. Bellinger's WACC is $7\%.$

What is Project A$\text{'}$s MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

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What is Project B$\text{'}$s MIRR? Do not round intermediate calculations. Round your answer to two decimal places.

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