Question
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below: Year X Y 0 -$5,000 -$5,000
Your company is considering two mutually exclusive projects, X and Y, whose costs and cash flows are shown below:
| Year | X | Y | ||
| 0 | -$5,000 | -$5,000 | ||
| 1 | 1,000 | 4,500 | ||
| 2 | 1,500 | 1,500 | ||
| 3 | 2,000 | 1,000 | ||
| 4 | 4,000 | 500 | ||
The projects are equally risky, and their cost of capital is 12%. You must make a recommendation, and you must base it on the modified IRR (MIRR). Calculate the two projects' MIRRs. Do not round intermediate calculations. Round your answers to two decimal places.
Project X: %
Project Y: %
Which project has the higher MIRR?
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Free Dollar For College For Dummies
Authors: David Rosen, Caryn Mladen
1st Edition
0764554670, 978-0764554674
